Correlation Between Eastern Media and Taiwan Cogeneration
Can any of the company-specific risk be diversified away by investing in both Eastern Media 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 Eastern Media and Taiwan Cogeneration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Media International and Taiwan Cogeneration Corp, you can compare the effects of market volatilities on Eastern Media 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 Eastern Media with a short position of Taiwan Cogeneration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Media and Taiwan Cogeneration.
Diversification Opportunities for Eastern Media and Taiwan Cogeneration
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and Taiwan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Media International 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 Eastern Media 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 Eastern Media International 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 Eastern Media i.e., Eastern Media and Taiwan Cogeneration go up and down completely randomly.
Pair Corralation between Eastern Media and Taiwan Cogeneration
Assuming the 90 days trading horizon Eastern Media International is expected to under-perform the Taiwan Cogeneration. In addition to that, Eastern Media is 1.16 times more volatile than Taiwan Cogeneration Corp. It trades about -0.13 of its total potential returns per unit of risk. Taiwan Cogeneration Corp is currently generating about -0.07 per unit of volatility. If you would invest 4,480 in Taiwan Cogeneration Corp on September 2, 2024 and sell it today you would lose (245.00) from holding Taiwan Cogeneration Corp or give up 5.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Media International vs. Taiwan Cogeneration Corp
Performance |
| Timeline |
| Eastern Media Intern |
| Taiwan Cogeneration Corp |
Eastern Media and Taiwan Cogeneration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Media and Taiwan Cogeneration
The main advantage of trading using opposite Eastern Media and Taiwan Cogeneration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Media 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.| Eastern Media vs. Yang Ming Marine | Eastern Media vs. Wan Hai Lines | Eastern Media vs. U Ming Marine Transport | Eastern Media vs. Taiwan Navigation Co |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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