Correlation Between Taichung Commercial and Union Insurance
Can any of the company-specific risk be diversified away by investing in both Taichung Commercial and Union Insurance 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 Taichung Commercial and Union Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taichung Commercial Bank and Union Insurance Co, you can compare the effects of market volatilities on Taichung Commercial and Union Insurance 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 Taichung Commercial with a short position of Union Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taichung Commercial and Union Insurance.
Diversification Opportunities for Taichung Commercial and Union Insurance
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taichung and Union is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Taichung Commercial Bank and Union Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Insurance and Taichung Commercial 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 Taichung Commercial Bank are associated (or correlated) with Union Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Insurance has no effect on the direction of Taichung Commercial i.e., Taichung Commercial and Union Insurance go up and down completely randomly.
Pair Corralation between Taichung Commercial and Union Insurance
Assuming the 90 days trading horizon Taichung Commercial Bank is expected to generate 1.56 times more return on investment than Union Insurance. However, Taichung Commercial is 1.56 times more volatile than Union Insurance Co. It trades about 0.35 of its potential returns per unit of risk. Union Insurance Co is currently generating about 0.08 per unit of risk. If you would invest 1,775 in Taichung Commercial Bank on September 13, 2024 and sell it today you would earn a total of 150.00 from holding Taichung Commercial Bank or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taichung Commercial Bank vs. Union Insurance Co
Performance |
| Timeline |
| Taichung Commercial Bank |
| Union Insurance |
Taichung Commercial and Union Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taichung Commercial and Union Insurance
The main advantage of trading using opposite Taichung Commercial and Union Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taichung Commercial position performs unexpectedly, Union Insurance 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 Union Insurance will offset losses from the drop in Union Insurance's long position.| Taichung Commercial vs. Central Reinsurance Corp | Taichung Commercial vs. Huaku Development Co | Taichung Commercial vs. Fubon Financial Holding | Taichung Commercial vs. Chailease Holding Co |
| Union Insurance vs. Central Reinsurance Corp | Union Insurance vs. Huaku Development Co | Union Insurance vs. Fubon Financial Holding | Union Insurance vs. Chailease Holding 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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