Correlation Between Huaku Development and Taishin Financial
Can any of the company-specific risk be diversified away by investing in both Huaku Development and Taishin Financial 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 Huaku Development and Taishin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huaku Development Co and Taishin Financial Holding, you can compare the effects of market volatilities on Huaku Development and Taishin Financial 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 Huaku Development with a short position of Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and Taishin Financial.
Diversification Opportunities for Huaku Development and Taishin Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Huaku and Taishin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding and Huaku Development 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 Huaku Development Co are associated (or correlated) with Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Huaku Development i.e., Huaku Development and Taishin Financial go up and down completely randomly.
Pair Corralation between Huaku Development and Taishin Financial
Assuming the 90 days trading horizon Huaku Development is expected to generate 1.79 times less return on investment than Taishin Financial. In addition to that, Huaku Development is 1.65 times more volatile than Taishin Financial Holding. It trades about 0.03 of its total potential returns per unit of risk. Taishin Financial Holding is currently generating about 0.08 per unit of volatility. If you would invest 1,710 in Taishin Financial Holding on September 5, 2024 and sell it today you would earn a total of 40.00 from holding Taishin Financial Holding or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaku Development Co vs. Taishin Financial Holding
Performance |
| Timeline |
| Huaku Development |
| Taishin Financial Holding |
Huaku Development and Taishin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and Taishin Financial
The main advantage of trading using opposite Huaku Development and Taishin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, Taishin Financial 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 Taishin Financial will offset losses from the drop in Taishin Financial's long position.| Huaku Development vs. Ruentex Development Co | Huaku Development vs. Taiwan Cement Corp | Huaku Development vs. Symtek Automation Asia | Huaku Development vs. CTCI Corp |
| Taishin Financial vs. CTBC Financial Holding | Taishin Financial vs. First Financial Holding | Taishin Financial vs. Mega Financial Holding | Taishin Financial vs. ESUN Financial Holding |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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