Correlation Between Chang Hwa and Ta Ya
Can any of the company-specific risk be diversified away by investing in both Chang Hwa and Ta Ya 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 Chang Hwa and Ta Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chang Hwa Commercial and Ta Ya Electric, you can compare the effects of market volatilities on Chang Hwa and Ta Ya 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 Chang Hwa with a short position of Ta Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chang Hwa and Ta Ya.
Diversification Opportunities for Chang Hwa and Ta Ya
Modest diversification
The 3 months correlation between Chang and 1609 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Chang Hwa Commercial and Ta Ya Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Ya Electric and Chang Hwa 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 Chang Hwa Commercial are associated (or correlated) with Ta Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Ya Electric has no effect on the direction of Chang Hwa i.e., Chang Hwa and Ta Ya go up and down completely randomly.
Pair Corralation between Chang Hwa and Ta Ya
Assuming the 90 days trading horizon Chang Hwa is expected to generate 14.02 times less return on investment than Ta Ya. But when comparing it to its historical volatility, Chang Hwa Commercial is 3.63 times less risky than Ta Ya. It trades about 0.02 of its potential returns per unit of risk. Ta Ya Electric is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,330 in Ta Ya Electric on September 1, 2024 and sell it today you would earn a total of 2,255 from holding Ta Ya Electric or generate 96.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Chang Hwa Commercial vs. Ta Ya Electric
Performance |
| Timeline |
| Chang Hwa Commercial |
| Ta Ya Electric |
Chang Hwa and Ta Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chang Hwa and Ta Ya
The main advantage of trading using opposite Chang Hwa and Ta Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chang Hwa position performs unexpectedly, Ta Ya 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 Ta Ya will offset losses from the drop in Ta Ya's long position.| Chang Hwa vs. Central Reinsurance Corp | Chang Hwa vs. Huaku Development Co | Chang Hwa vs. Fubon Financial Holding |
| Ta Ya vs. BES Engineering Co | Ta Ya vs. Continental Holdings Corp | Ta Ya vs. Kee Tai Properties | Ta Ya vs. Hung Sheng Construction |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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