Correlation Between Taiwan High and Aero Win
Can any of the company-specific risk be diversified away by investing in both Taiwan High and Aero Win 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 Aero Win 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 Aero Win Technology, you can compare the effects of market volatilities on Taiwan High and Aero Win 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 Aero Win. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan High and Aero Win.
Diversification Opportunities for Taiwan High and Aero Win
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Aero is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan High Speed and Aero Win Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aero Win Technology 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 Aero Win. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aero Win Technology has no effect on the direction of Taiwan High i.e., Taiwan High and Aero Win go up and down completely randomly.
Pair Corralation between Taiwan High and Aero Win
Assuming the 90 days trading horizon Taiwan High is expected to generate 23.96 times less return on investment than Aero Win. But when comparing it to its historical volatility, Taiwan High Speed is 3.81 times less risky than Aero Win. It trades about 0.01 of its potential returns per unit of risk. Aero Win Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,650 in Aero Win Technology on September 12, 2024 and sell it today you would earn a total of 1,120 from holding Aero Win Technology or generate 42.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan High Speed vs. Aero Win Technology
Performance |
| Timeline |
| Taiwan High Speed |
| Aero Win Technology |
Taiwan High and Aero Win Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan High and Aero Win
The main advantage of trading using opposite Taiwan High and Aero Win positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan High position performs unexpectedly, Aero Win 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 Aero Win will offset losses from the drop in Aero Win's long position.| Taiwan High vs. Yang Ming Marine | Taiwan High vs. Wan Hai Lines | Taiwan High vs. U Ming Marine Transport | Taiwan High vs. Taiwan Navigation Co |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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