Correlation Between E Lead and Taiwan Shin
Can any of the company-specific risk be diversified away by investing in both E Lead and Taiwan Shin 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 E Lead and Taiwan Shin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Lead Electronic Co and Taiwan Shin Kong, you can compare the effects of market volatilities on E Lead and Taiwan Shin 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 E Lead with a short position of Taiwan Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Lead and Taiwan Shin.
Diversification Opportunities for E Lead and Taiwan Shin
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between 2497 and Taiwan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding E Lead Electronic Co and Taiwan Shin Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Shin Kong and E Lead 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 E Lead Electronic Co are associated (or correlated) with Taiwan Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Shin Kong has no effect on the direction of E Lead i.e., E Lead and Taiwan Shin go up and down completely randomly.
Pair Corralation between E Lead and Taiwan Shin
Assuming the 90 days trading horizon E Lead Electronic Co is expected to generate 6.49 times more return on investment than Taiwan Shin. However, E Lead is 6.49 times more volatile than Taiwan Shin Kong. It trades about 0.06 of its potential returns per unit of risk. Taiwan Shin Kong is currently generating about -0.01 per unit of risk. If you would invest 6,290 in E Lead Electronic Co on August 28, 2024 and sell it today you would earn a total of 520.00 from holding E Lead Electronic Co or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Lead Electronic Co vs. Taiwan Shin Kong
Performance |
| Timeline |
| E Lead Electronic |
| Taiwan Shin Kong |
E Lead and Taiwan Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Lead and Taiwan Shin
The main advantage of trading using opposite E Lead and Taiwan Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Lead position performs unexpectedly, Taiwan Shin 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 Shin will offset losses from the drop in Taiwan Shin's long position.| E Lead vs. Taiwan Semiconductor Manufacturing | E Lead vs. Hon Hai Precision | E Lead vs. MediaTek | E Lead vs. Chunghwa Telecom Co |
| Taiwan Shin vs. Taiwan Secom Co | Taiwan Shin vs. Yulon Finance Corp | Taiwan Shin vs. CHC Resources Corp | Taiwan Shin vs. Nak Sealing Technologies |
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 CEOs Directory module to screen CEOs from public companies around the world.
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