Correlation Between Taiwan High and Taiwan FamilyMart
Can any of the company-specific risk be diversified away by investing in both Taiwan High and Taiwan FamilyMart 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 Taiwan FamilyMart 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 Taiwan FamilyMart Co, you can compare the effects of market volatilities on Taiwan High and Taiwan FamilyMart 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 Taiwan FamilyMart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan High and Taiwan FamilyMart.
Diversification Opportunities for Taiwan High and Taiwan FamilyMart
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and Taiwan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan High Speed and Taiwan FamilyMart Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan FamilyMart 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 Taiwan FamilyMart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan FamilyMart has no effect on the direction of Taiwan High i.e., Taiwan High and Taiwan FamilyMart go up and down completely randomly.
Pair Corralation between Taiwan High and Taiwan FamilyMart
Assuming the 90 days trading horizon Taiwan High Speed is expected to generate 1.31 times more return on investment than Taiwan FamilyMart. However, Taiwan High is 1.31 times more volatile than Taiwan FamilyMart Co. It trades about -0.01 of its potential returns per unit of risk. Taiwan FamilyMart Co is currently generating about -0.03 per unit of risk. If you would invest 2,950 in Taiwan High Speed on November 27, 2024 and sell it today you would lose (130.00) from holding Taiwan High Speed or give up 4.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan High Speed vs. Taiwan FamilyMart Co
Performance |
| Timeline |
| Taiwan High Speed |
| Taiwan FamilyMart |
Taiwan High and Taiwan FamilyMart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan High and Taiwan FamilyMart
The main advantage of trading using opposite Taiwan High and Taiwan FamilyMart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan High position performs unexpectedly, Taiwan FamilyMart 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 FamilyMart will offset losses from the drop in Taiwan FamilyMart'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 |
| Taiwan FamilyMart vs. President Chain Store | Taiwan FamilyMart vs. Uni President Enterprises Corp | Taiwan FamilyMart vs. Poya International Co | Taiwan FamilyMart vs. Hotai Motor 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |