Correlation Between Senao International and Tainan Spinning
Can any of the company-specific risk be diversified away by investing in both Senao International and Tainan Spinning 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 Senao International and Tainan Spinning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senao International Co and Tainan Spinning Co, you can compare the effects of market volatilities on Senao International and Tainan Spinning 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 Senao International with a short position of Tainan Spinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senao International and Tainan Spinning.
Diversification Opportunities for Senao International and Tainan Spinning
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Senao and Tainan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Senao International Co and Tainan Spinning Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Spinning and Senao International 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 Senao International Co are associated (or correlated) with Tainan Spinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Spinning has no effect on the direction of Senao International i.e., Senao International and Tainan Spinning go up and down completely randomly.
Pair Corralation between Senao International and Tainan Spinning
Assuming the 90 days trading horizon Senao International Co is expected to under-perform the Tainan Spinning. But the stock apears to be less risky and, when comparing its historical volatility, Senao International Co is 1.27 times less risky than Tainan Spinning. The stock trades about -0.17 of its potential returns per unit of risk. The Tainan Spinning Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,525 in Tainan Spinning Co on September 12, 2024 and sell it today you would lose (15.00) from holding Tainan Spinning Co or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senao International Co vs. Tainan Spinning Co
Performance |
| Timeline |
| Senao International |
| Tainan Spinning |
Senao International and Tainan Spinning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senao International and Tainan Spinning
The main advantage of trading using opposite Senao International and Tainan Spinning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senao International position performs unexpectedly, Tainan Spinning 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 Tainan Spinning will offset losses from the drop in Tainan Spinning's long position.| Senao International vs. Air Asia Co | Senao International vs. Data International Co | Senao International vs. Trade Van Information Services | Senao International vs. Mitake Information |
| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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