Correlation Between Taiwan Navigation and Chinese Maritime
Can any of the company-specific risk be diversified away by investing in both Taiwan Navigation and Chinese Maritime 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 Chinese Maritime 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 Chinese Maritime Transport, you can compare the effects of market volatilities on Taiwan Navigation and Chinese Maritime 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 Chinese Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Navigation and Chinese Maritime.
Diversification Opportunities for Taiwan Navigation and Chinese Maritime
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Taiwan and Chinese is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Navigation Co and Chinese Maritime Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Maritime Tra 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 Chinese Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Maritime Tra has no effect on the direction of Taiwan Navigation i.e., Taiwan Navigation and Chinese Maritime go up and down completely randomly.
Pair Corralation between Taiwan Navigation and Chinese Maritime
Assuming the 90 days trading horizon Taiwan Navigation is expected to generate 3.61 times less return on investment than Chinese Maritime. But when comparing it to its historical volatility, Taiwan Navigation Co is 1.89 times less risky than Chinese Maritime. It trades about 0.03 of its potential returns per unit of risk. Chinese Maritime Transport is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,225 in Chinese Maritime Transport on September 1, 2024 and sell it today you would earn a total of 75.00 from holding Chinese Maritime Transport or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Navigation Co vs. Chinese Maritime Transport
Performance |
| Timeline |
| Taiwan Navigation |
| Chinese Maritime Tra |
Taiwan Navigation and Chinese Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Navigation and Chinese Maritime
The main advantage of trading using opposite Taiwan Navigation and Chinese Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Navigation position performs unexpectedly, Chinese Maritime 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 Chinese Maritime will offset losses from the drop in Chinese Maritime's long position.| Taiwan Navigation vs. U Ming Marine Transport | Taiwan Navigation vs. Sincere Navigation Corp | Taiwan Navigation vs. Wan Hai Lines | Taiwan Navigation vs. Chinese Maritime Transport |
| Chinese Maritime vs. U Ming Marine Transport | Chinese Maritime vs. Sincere Navigation Corp | Chinese Maritime vs. Taiwan Navigation Co | Chinese Maritime vs. Huaku Development 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 CEOs Directory module to screen CEOs from public companies around the world.
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