Correlation Between Kerry TJ and Taiwan Cogeneration
Can any of the company-specific risk be diversified away by investing in both Kerry TJ and Taiwan Cogeneration 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 Kerry TJ and Taiwan Cogeneration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry TJ Logistics and Taiwan Cogeneration Corp, you can compare the effects of market volatilities on Kerry TJ and Taiwan Cogeneration 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 Kerry TJ with a short position of Taiwan Cogeneration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry TJ and Taiwan Cogeneration.
Diversification Opportunities for Kerry TJ and Taiwan Cogeneration
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kerry and Taiwan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kerry TJ Logistics and Taiwan Cogeneration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cogeneration Corp and Kerry TJ 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 Kerry TJ Logistics are associated (or correlated) with Taiwan Cogeneration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cogeneration Corp has no effect on the direction of Kerry TJ i.e., Kerry TJ and Taiwan Cogeneration go up and down completely randomly.
Pair Corralation between Kerry TJ and Taiwan Cogeneration
Assuming the 90 days trading horizon Kerry TJ Logistics is expected to generate 0.87 times more return on investment than Taiwan Cogeneration. However, Kerry TJ Logistics is 1.15 times less risky than Taiwan Cogeneration. It trades about -0.16 of its potential returns per unit of risk. Taiwan Cogeneration Corp is currently generating about -0.24 per unit of risk. If you would invest 4,020 in Kerry TJ Logistics on October 26, 2024 and sell it today you would lose (140.00) from holding Kerry TJ Logistics or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kerry TJ Logistics vs. Taiwan Cogeneration Corp
Performance |
| Timeline |
| Kerry TJ Logistics |
| Taiwan Cogeneration Corp |
Kerry TJ and Taiwan Cogeneration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry TJ and Taiwan Cogeneration
The main advantage of trading using opposite Kerry TJ and Taiwan Cogeneration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry TJ position performs unexpectedly, Taiwan Cogeneration 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 Cogeneration will offset losses from the drop in Taiwan Cogeneration's long position.| Kerry TJ vs. U Ming Marine Transport | Kerry TJ vs. Evergreen International Storage | Kerry TJ vs. Yang Ming Marine | Kerry TJ vs. President Chain Store |
| Taiwan Cogeneration vs. Great Taipei Gas | Taiwan Cogeneration vs. Taiwan Cement Corp | Taiwan Cogeneration vs. Mega Financial Holding | Taiwan Cogeneration vs. First 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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