Correlation Between Taiwan High and Jinli Group
Can any of the company-specific risk be diversified away by investing in both Taiwan High and Jinli Group 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 Jinli Group 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 Jinli Group Holdings, you can compare the effects of market volatilities on Taiwan High and Jinli Group 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 Jinli Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan High and Jinli Group.
Diversification Opportunities for Taiwan High and Jinli Group
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taiwan and Jinli is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan High Speed and Jinli Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinli Group Holdings 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 Jinli Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinli Group Holdings has no effect on the direction of Taiwan High i.e., Taiwan High and Jinli Group go up and down completely randomly.
Pair Corralation between Taiwan High and Jinli Group
Assuming the 90 days trading horizon Taiwan High is expected to generate 7.36 times less return on investment than Jinli Group. But when comparing it to its historical volatility, Taiwan High Speed is 2.29 times less risky than Jinli Group. It trades about 0.01 of its potential returns per unit of risk. Jinli Group Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,170 in Jinli Group Holdings on September 2, 2024 and sell it today you would earn a total of 120.00 from holding Jinli Group Holdings or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan High Speed vs. Jinli Group Holdings
Performance |
| Timeline |
| Taiwan High Speed |
| Jinli Group Holdings |
Taiwan High and Jinli Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan High and Jinli Group
The main advantage of trading using opposite Taiwan High and Jinli Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan High position performs unexpectedly, Jinli Group 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 Jinli Group will offset losses from the drop in Jinli Group'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 |
| Jinli Group vs. Chaintech Technology Corp | Jinli Group vs. Avision | Jinli Group vs. Clevo Co | Jinli Group vs. Elitegroup Computer Systems |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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