Correlation Between Taiwan Fire and Union Insurance
Can any of the company-specific risk be diversified away by investing in both Taiwan Fire 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 Taiwan Fire and Union Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Fire Marine and Union Insurance Co, you can compare the effects of market volatilities on Taiwan Fire 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 Taiwan Fire with a short position of Union Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Fire and Union Insurance.
Diversification Opportunities for Taiwan Fire and Union Insurance
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Union is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Fire Marine and Union Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Insurance and Taiwan Fire 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 Fire Marine 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 Taiwan Fire i.e., Taiwan Fire and Union Insurance go up and down completely randomly.
Pair Corralation between Taiwan Fire and Union Insurance
Assuming the 90 days trading horizon Taiwan Fire Marine is expected to generate 0.7 times more return on investment than Union Insurance. However, Taiwan Fire Marine is 1.43 times less risky than Union Insurance. It trades about 0.48 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 2,820 in Taiwan Fire Marine on September 13, 2024 and sell it today you would earn a total of 145.00 from holding Taiwan Fire Marine or generate 5.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Fire Marine vs. Union Insurance Co
Performance |
| Timeline |
| Taiwan Fire Marine |
| Union Insurance |
Taiwan Fire and Union Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Fire and Union Insurance
The main advantage of trading using opposite Taiwan Fire and Union Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Fire 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.| Taiwan Fire vs. Shinkong Insurance Co | Taiwan Fire vs. China Bills Finance | Taiwan Fire vs. Taiwan Business Bank | Taiwan Fire vs. Far Eastern International |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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