Correlation Between Taiwan High and Hey Song
Can any of the company-specific risk be diversified away by investing in both Taiwan High and Hey Song 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 High and Hey Song into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan High Speed and Hey Song Corp, you can compare the effects of market volatilities on Taiwan High and Hey Song 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 High with a short position of Hey Song. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan High and Hey Song.
Diversification Opportunities for Taiwan High and Hey Song
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Hey is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan High Speed and Hey Song Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hey Song Corp and Taiwan High 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 High Speed are associated (or correlated) with Hey Song. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hey Song Corp has no effect on the direction of Taiwan High i.e., Taiwan High and Hey Song go up and down completely randomly.
Pair Corralation between Taiwan High and Hey Song
Assuming the 90 days trading horizon Taiwan High Speed is expected to under-perform the Hey Song. In addition to that, Taiwan High is 1.44 times more volatile than Hey Song Corp. It trades about -0.16 of its total potential returns per unit of risk. Hey Song Corp is currently generating about 0.0 per unit of volatility. If you would invest 4,155 in Hey Song Corp on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Hey Song Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan High Speed vs. Hey Song Corp
Performance |
| Timeline |
| Taiwan High Speed |
| Hey Song Corp |
Taiwan High and Hey Song Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan High and Hey Song
The main advantage of trading using opposite Taiwan High and Hey Song positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan High position performs unexpectedly, Hey Song 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 Hey Song will offset losses from the drop in Hey Song's long position.| Taiwan High vs. Chunghwa Telecom Co | Taiwan High vs. ESUN Financial Holding | Taiwan High vs. Mega Financial Holding | Taiwan High vs. Taiwan Cement Corp |
| Hey Song vs. Great Wall Enterprise | Hey Song vs. Uni President Enterprises Corp | Hey Song vs. Wei Chuan Foods | Hey Song vs. Taisun Enterprise 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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