Correlation Between China and Ta Yih
Can any of the company-specific risk be diversified away by investing in both China and Ta Yih 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 China and Ta Yih into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Motor Corp and Ta Yih Industrial, you can compare the effects of market volatilities on China and Ta Yih 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 China with a short position of Ta Yih. Check out your portfolio center. Please also check ongoing floating volatility patterns of China and Ta Yih.
Diversification Opportunities for China and Ta Yih
Very good diversification
The 3 months correlation between China and 1521 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding China Motor Corp and Ta Yih Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Yih Industrial and China 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 China Motor Corp are associated (or correlated) with Ta Yih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Yih Industrial has no effect on the direction of China i.e., China and Ta Yih go up and down completely randomly.
Pair Corralation between China and Ta Yih
Assuming the 90 days trading horizon China Motor Corp is expected to generate 0.83 times more return on investment than Ta Yih. However, China Motor Corp is 1.2 times less risky than Ta Yih. It trades about 0.21 of its potential returns per unit of risk. Ta Yih Industrial is currently generating about -0.29 per unit of risk. If you would invest 7,570 in China Motor Corp on October 25, 2024 and sell it today you would earn a total of 530.00 from holding China Motor Corp or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Motor Corp vs. Ta Yih Industrial
Performance |
| Timeline |
| China Motor Corp |
| Ta Yih Industrial |
China and Ta Yih Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China and Ta Yih
The main advantage of trading using opposite China and Ta Yih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China position performs unexpectedly, Ta Yih 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 Ta Yih will offset losses from the drop in Ta Yih's long position.| China vs. Yulon Motor Co | China vs. Nan Ya Plastics | China vs. Cheng Shin Rubber | China vs. Far Eastern New |
| Ta Yih vs. Tong Yang Industry | Ta Yih vs. Basso Industry Corp | Ta Yih vs. China Motor Corp | Ta Yih vs. Gordon Auto Body |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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