Correlation Between Sunspring Metal and Taiwan Taomee
Can any of the company-specific risk be diversified away by investing in both Sunspring Metal and Taiwan Taomee 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 Sunspring Metal and Taiwan Taomee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunspring Metal Corp and Taiwan Taomee Co, you can compare the effects of market volatilities on Sunspring Metal and Taiwan Taomee 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 Sunspring Metal with a short position of Taiwan Taomee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunspring Metal and Taiwan Taomee.
Diversification Opportunities for Sunspring Metal and Taiwan Taomee
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sunspring and Taiwan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sunspring Metal Corp and Taiwan Taomee Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Taomee and Sunspring Metal 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 Sunspring Metal Corp are associated (or correlated) with Taiwan Taomee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Taomee has no effect on the direction of Sunspring Metal i.e., Sunspring Metal and Taiwan Taomee go up and down completely randomly.
Pair Corralation between Sunspring Metal and Taiwan Taomee
Assuming the 90 days trading horizon Sunspring Metal Corp is expected to generate 0.99 times more return on investment than Taiwan Taomee. However, Sunspring Metal Corp is 1.01 times less risky than Taiwan Taomee. It trades about 0.06 of its potential returns per unit of risk. Taiwan Taomee Co is currently generating about 0.01 per unit of risk. If you would invest 2,495 in Sunspring Metal Corp on September 3, 2024 and sell it today you would earn a total of 1,035 from holding Sunspring Metal Corp or generate 41.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunspring Metal Corp vs. Taiwan Taomee Co
Performance |
| Timeline |
| Sunspring Metal Corp |
| Taiwan Taomee |
Sunspring Metal and Taiwan Taomee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunspring Metal and Taiwan Taomee
The main advantage of trading using opposite Sunspring Metal and Taiwan Taomee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunspring Metal position performs unexpectedly, Taiwan Taomee 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 Taomee will offset losses from the drop in Taiwan Taomee's long position.| Sunspring Metal vs. Universal Microelectronics Co | Sunspring Metal vs. AVerMedia Technologies | Sunspring Metal vs. Symtek Automation Asia | Sunspring Metal vs. WiseChip Semiconductor |
| Taiwan Taomee vs. U Media Communications | Taiwan Taomee vs. Ma Kuang Healthcare | Taiwan Taomee vs. STARLUX Airlines Co | Taiwan Taomee vs. Cameo Communications |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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