Correlation Between Taiwan Semiconductor and Tong Hsing
Can any of the company-specific risk be diversified away by investing in both Taiwan Semiconductor and Tong Hsing 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 Semiconductor and Tong Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Semiconductor Manufacturing and Tong Hsing Electronic, you can compare the effects of market volatilities on Taiwan Semiconductor and Tong Hsing 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 Semiconductor with a short position of Tong Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Semiconductor and Tong Hsing.
Diversification Opportunities for Taiwan Semiconductor and Tong Hsing
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Tong is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Semiconductor Manufactu and Tong Hsing Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hsing Electronic and Taiwan Semiconductor 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 Semiconductor Manufacturing are associated (or correlated) with Tong Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hsing Electronic has no effect on the direction of Taiwan Semiconductor i.e., Taiwan Semiconductor and Tong Hsing go up and down completely randomly.
Pair Corralation between Taiwan Semiconductor and Tong Hsing
Assuming the 90 days trading horizon Taiwan Semiconductor Manufacturing is expected to under-perform the Tong Hsing. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Semiconductor Manufacturing is 1.07 times less risky than Tong Hsing. The stock trades about -0.04 of its potential returns per unit of risk. The Tong Hsing Electronic is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 12,950 in Tong Hsing Electronic on September 12, 2024 and sell it today you would earn a total of 450.00 from holding Tong Hsing Electronic or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Taiwan Semiconductor Manufactu vs. Tong Hsing Electronic
Performance |
| Timeline |
| Taiwan Semiconductor |
| Tong Hsing Electronic |
Taiwan Semiconductor and Tong Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Semiconductor and Tong Hsing
The main advantage of trading using opposite Taiwan Semiconductor and Tong Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Semiconductor position performs unexpectedly, Tong Hsing 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 Tong Hsing will offset losses from the drop in Tong Hsing's long position.| Taiwan Semiconductor vs. AU Optronics | Taiwan Semiconductor vs. Innolux Corp | Taiwan Semiconductor vs. Ruentex Development Co | Taiwan Semiconductor vs. WiseChip Semiconductor |
| Tong Hsing vs. AU Optronics | Tong Hsing vs. Innolux Corp | Tong Hsing vs. Ruentex Development Co | Tong Hsing vs. WiseChip Semiconductor |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |