Correlation Between Taiwan Navigation and Airtac International
Can any of the company-specific risk be diversified away by investing in both Taiwan Navigation and Airtac International 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 Taiwan Navigation and Airtac International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Navigation Co and Airtac International Group, you can compare the effects of market volatilities on Taiwan Navigation and Airtac International 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 Taiwan Navigation with a short position of Airtac International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Navigation and Airtac International.
Diversification Opportunities for Taiwan Navigation and Airtac International
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Airtac is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Navigation Co and Airtac International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtac International and Taiwan Navigation 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 Taiwan Navigation Co are associated (or correlated) with Airtac International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtac International has no effect on the direction of Taiwan Navigation i.e., Taiwan Navigation and Airtac International go up and down completely randomly.
Pair Corralation between Taiwan Navigation and Airtac International
Assuming the 90 days trading horizon Taiwan Navigation Co is expected to under-perform the Airtac International. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Navigation Co is 1.98 times less risky than Airtac International. The stock trades about -0.34 of its potential returns per unit of risk. The Airtac International Group is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 87,600 in Airtac International Group on September 13, 2024 and sell it today you would lose (2,100) from holding Airtac International Group or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Navigation Co vs. Airtac International Group
Performance |
| Timeline |
| Taiwan Navigation |
| Airtac International |
Taiwan Navigation and Airtac International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Navigation and Airtac International
The main advantage of trading using opposite Taiwan Navigation and Airtac International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Navigation position performs unexpectedly, Airtac International 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 Airtac International will offset losses from the drop in Airtac International's long position.| Taiwan Navigation vs. Yang Ming Marine | Taiwan Navigation vs. Wan Hai Lines | Taiwan Navigation vs. U Ming Marine Transport | Taiwan Navigation vs. China Airlines |
| Airtac International vs. Yang Ming Marine | Airtac International vs. Wan Hai Lines | Airtac International vs. U Ming Marine Transport | Airtac International vs. Taiwan Navigation Co |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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