Correlation Between Huaku Development and Great Taipei
Can any of the company-specific risk be diversified away by investing in both Huaku Development and Great Taipei 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 Great Taipei 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 Great Taipei Gas, you can compare the effects of market volatilities on Huaku Development and Great Taipei 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 Great Taipei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaku Development and Great Taipei.
Diversification Opportunities for Huaku Development and Great Taipei
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Huaku and Great is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Huaku Development Co and Great Taipei Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Taipei Gas 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 Great Taipei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Taipei Gas has no effect on the direction of Huaku Development i.e., Huaku Development and Great Taipei go up and down completely randomly.
Pair Corralation between Huaku Development and Great Taipei
If you would invest 8,760 in Huaku Development Co on September 4, 2024 and sell it today you would earn a total of 3,140 from holding Huaku Development Co or generate 35.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Huaku Development Co vs. Great Taipei Gas
Performance |
| Timeline |
| Huaku Development |
| Great Taipei Gas |
Huaku Development and Great Taipei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaku Development and Great Taipei
The main advantage of trading using opposite Huaku Development and Great Taipei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaku Development position performs unexpectedly, Great Taipei 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 Great Taipei will offset losses from the drop in Great Taipei's long position.| Huaku Development vs. Chong Hong Construction | Huaku Development vs. Highwealth Construction Corp | Huaku Development vs. Fubon Financial Holding | Huaku Development vs. CTBC Financial Holding |
| Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Taiwan Cogeneration Corp | Great Taipei vs. Shin Shin Natural |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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