Correlation Between Taiwan Glass and China Glaze
Can any of the company-specific risk be diversified away by investing in both Taiwan Glass and China Glaze at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Taiwan Glass and China Glaze into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Glass Ind and China Glaze Co, you can compare the effects of market volatilities on Taiwan Glass and China Glaze and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Taiwan Glass with a short position of China Glaze. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Glass and China Glaze.
Diversification Opportunities for Taiwan Glass and China Glaze
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and China is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Glass Ind and China Glaze Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Glaze and Taiwan Glass is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Taiwan Glass Ind are associated (or correlated) with China Glaze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Glaze has no effect on the direction of Taiwan Glass i.e., Taiwan Glass and China Glaze go up and down completely randomly.
Pair Corralation between Taiwan Glass and China Glaze
Assuming the 90 days trading horizon Taiwan Glass is expected to generate 1.03 times less return on investment than China Glaze. But when comparing it to its historical volatility, Taiwan Glass Ind is 1.08 times less risky than China Glaze. It trades about 0.07 of its potential returns per unit of risk. China Glaze Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,070 in China Glaze Co on September 1, 2024 and sell it today you would earn a total of 80.00 from holding China Glaze Co or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Glass Ind vs. China Glaze Co
Performance |
| Timeline |
| Taiwan Glass Ind |
| China Glaze |
Taiwan Glass and China Glaze Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Glass and China Glaze
The main advantage of trading using opposite Taiwan Glass and China Glaze positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Glass position performs unexpectedly, China Glaze can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China Glaze will offset losses from the drop in China Glaze's long position.| Taiwan Glass vs. Yulon Motor Co | Taiwan Glass vs. Far Eastern Department | Taiwan Glass vs. China Steel Corp | Taiwan Glass vs. Chang Hwa Commercial |
| China Glaze vs. Basso Industry Corp | China Glaze vs. Chung Hsin Electric Machinery | China Glaze vs. TYC Brother Industrial | China Glaze vs. TECO Electric Machinery |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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