Correlation Between Taiwan Pelican and Taiwan Allied
Can any of the company-specific risk be diversified away by investing in both Taiwan Pelican and Taiwan Allied 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 Pelican and Taiwan Allied into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Pelican Express and Taiwan Allied Container, you can compare the effects of market volatilities on Taiwan Pelican and Taiwan Allied 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 Pelican with a short position of Taiwan Allied. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Pelican and Taiwan Allied.
Diversification Opportunities for Taiwan Pelican and Taiwan Allied
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Taiwan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Pelican Express and Taiwan Allied Container in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Allied Container and Taiwan Pelican 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 Pelican Express are associated (or correlated) with Taiwan Allied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Allied Container has no effect on the direction of Taiwan Pelican i.e., Taiwan Pelican and Taiwan Allied go up and down completely randomly.
Pair Corralation between Taiwan Pelican and Taiwan Allied
Assuming the 90 days trading horizon Taiwan Pelican Express is expected to under-perform the Taiwan Allied. In addition to that, Taiwan Pelican is 1.59 times more volatile than Taiwan Allied Container. It trades about -0.01 of its total potential returns per unit of risk. Taiwan Allied Container is currently generating about -0.01 per unit of volatility. If you would invest 3,720 in Taiwan Allied Container on September 2, 2024 and sell it today you would lose (140.00) from holding Taiwan Allied Container or give up 3.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Taiwan Pelican Express vs. Taiwan Allied Container
Performance |
| Timeline |
| Taiwan Pelican Express |
| Taiwan Allied Container |
Taiwan Pelican and Taiwan Allied Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Pelican and Taiwan Allied
The main advantage of trading using opposite Taiwan Pelican and Taiwan Allied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Pelican position performs unexpectedly, Taiwan Allied 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 Allied will offset losses from the drop in Taiwan Allied's long position.| Taiwan Pelican vs. Kerry TJ Logistics | Taiwan Pelican vs. Yang Ming Marine | Taiwan Pelican vs. Wan Hai Lines | Taiwan Pelican vs. China Airlines |
| Taiwan Allied vs. WinMate Communication INC | Taiwan Allied vs. Emerging Display Technologies | Taiwan Allied vs. International CSRC Investment | Taiwan Allied vs. Farglory FTZ Investment |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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