Correlation Between Tung Ho and Taiwan Chinsan
Can any of the company-specific risk be diversified away by investing in both Tung Ho and Taiwan Chinsan 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 Tung Ho and Taiwan Chinsan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tung Ho Steel and Taiwan Chinsan Electronic, you can compare the effects of market volatilities on Tung Ho and Taiwan Chinsan 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 Tung Ho with a short position of Taiwan Chinsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Ho and Taiwan Chinsan.
Diversification Opportunities for Tung Ho and Taiwan Chinsan
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tung and Taiwan is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tung Ho Steel and Taiwan Chinsan Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Chinsan Electronic and Tung Ho 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 Tung Ho Steel are associated (or correlated) with Taiwan Chinsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Chinsan Electronic has no effect on the direction of Tung Ho i.e., Tung Ho and Taiwan Chinsan go up and down completely randomly.
Pair Corralation between Tung Ho and Taiwan Chinsan
Assuming the 90 days trading horizon Tung Ho Steel is expected to generate 0.43 times more return on investment than Taiwan Chinsan. However, Tung Ho Steel is 2.3 times less risky than Taiwan Chinsan. It trades about -0.05 of its potential returns per unit of risk. Taiwan Chinsan Electronic is currently generating about -0.09 per unit of risk. If you would invest 6,930 in Tung Ho Steel on October 25, 2024 and sell it today you would lose (110.00) from holding Tung Ho Steel or give up 1.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tung Ho Steel vs. Taiwan Chinsan Electronic
Performance |
| Timeline |
| Tung Ho Steel |
| Taiwan Chinsan Electronic |
Tung Ho and Taiwan Chinsan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Ho and Taiwan Chinsan
The main advantage of trading using opposite Tung Ho and Taiwan Chinsan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Ho position performs unexpectedly, Taiwan Chinsan 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 Taiwan Chinsan will offset losses from the drop in Taiwan Chinsan's long position.| Tung Ho vs. China Steel Corp | Tung Ho vs. Feng Hsin Steel | Tung Ho vs. Ta Chen Stainless | Tung Ho vs. Chung Hung Steel |
| Taiwan Chinsan vs. Advantech Co | Taiwan Chinsan vs. IEI Integration Corp | Taiwan Chinsan vs. Flytech Technology Co | Taiwan Chinsan vs. Ennoconn Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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