Correlation Between Wei Chih and Taishin Financial
Can any of the company-specific risk be diversified away by investing in both Wei Chih and Taishin Financial 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 Wei Chih and Taishin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wei Chih Steel and Taishin Financial Holding, you can compare the effects of market volatilities on Wei Chih and Taishin Financial 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 Wei Chih with a short position of Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chih and Taishin Financial.
Diversification Opportunities for Wei Chih and Taishin Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wei and Taishin is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chih Steel and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding and Wei Chih 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 Wei Chih Steel are associated (or correlated) with Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Wei Chih i.e., Wei Chih and Taishin Financial go up and down completely randomly.
Pair Corralation between Wei Chih and Taishin Financial
Assuming the 90 days trading horizon Wei Chih Steel is expected to generate 8.53 times more return on investment than Taishin Financial. However, Wei Chih is 8.53 times more volatile than Taishin Financial Holding. It trades about 0.12 of its potential returns per unit of risk. Taishin Financial Holding is currently generating about -0.11 per unit of risk. If you would invest 2,090 in Wei Chih Steel on October 29, 2024 and sell it today you would earn a total of 70.00 from holding Wei Chih Steel or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chih Steel vs. Taishin Financial Holding
Performance |
| Timeline |
| Wei Chih Steel |
| Taishin Financial Holding |
Wei Chih and Taishin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chih and Taishin Financial
The main advantage of trading using opposite Wei Chih and Taishin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chih position performs unexpectedly, Taishin Financial 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 Taishin Financial will offset losses from the drop in Taishin Financial's long position.| Wei Chih vs. Chung Hung Steel | Wei Chih vs. Sheng Yu Steel | Wei Chih vs. Hsin Kuang Steel | Wei Chih vs. Tung Ho Steel |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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