Correlation Between Taichung Commercial and Tainet Communication
Can any of the company-specific risk be diversified away by investing in both Taichung Commercial and Tainet Communication 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 Tainet Communication 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 Tainet Communication System, you can compare the effects of market volatilities on Taichung Commercial and Tainet Communication 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 Tainet Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taichung Commercial and Tainet Communication.
Diversification Opportunities for Taichung Commercial and Tainet Communication
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Taichung and Tainet is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Taichung Commercial Bank and Tainet Communication System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainet Communication 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 Tainet Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainet Communication has no effect on the direction of Taichung Commercial i.e., Taichung Commercial and Tainet Communication go up and down completely randomly.
Pair Corralation between Taichung Commercial and Tainet Communication
Assuming the 90 days trading horizon Taichung Commercial is expected to generate 1.57 times less return on investment than Tainet Communication. But when comparing it to its historical volatility, Taichung Commercial Bank is 2.85 times less risky than Tainet Communication. It trades about 0.08 of its potential returns per unit of risk. Tainet Communication System is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,090 in Tainet Communication System on October 16, 2024 and sell it today you would earn a total of 2,510 from holding Tainet Communication System or generate 49.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taichung Commercial Bank vs. Tainet Communication System
Performance |
| Timeline |
| Taichung Commercial Bank |
| Tainet Communication |
Taichung Commercial and Tainet Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taichung Commercial and Tainet Communication
The main advantage of trading using opposite Taichung Commercial and Tainet Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taichung Commercial position performs unexpectedly, Tainet Communication 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 Tainet Communication will offset losses from the drop in Tainet Communication's long position.| Taichung Commercial vs. Taiwan Business Bank | Taichung Commercial vs. Taishin Financial Holding | Taichung Commercial vs. Hua Nan Financial | Taichung Commercial vs. ESUN Financial Holding |
| Tainet Communication vs. Sun Max Tech | Tainet Communication vs. Simplo Technology Co | Tainet Communication vs. Maxigen Biotech | Tainet Communication vs. Taichung Commercial Bank |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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