Correlation Between Shinkong Insurance and Taiwan Secom
Can any of the company-specific risk be diversified away by investing in both Shinkong Insurance and Taiwan Secom 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 Shinkong Insurance and Taiwan Secom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinkong Insurance Co and Taiwan Secom Co, you can compare the effects of market volatilities on Shinkong Insurance and Taiwan Secom 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 Shinkong Insurance with a short position of Taiwan Secom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Insurance and Taiwan Secom.
Diversification Opportunities for Shinkong Insurance and Taiwan Secom
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinkong and Taiwan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and Taiwan Secom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Secom and Shinkong Insurance 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 Shinkong Insurance Co are associated (or correlated) with Taiwan Secom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Secom has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and Taiwan Secom go up and down completely randomly.
Pair Corralation between Shinkong Insurance and Taiwan Secom
Assuming the 90 days trading horizon Shinkong Insurance Co is expected to generate 1.09 times more return on investment than Taiwan Secom. However, Shinkong Insurance is 1.09 times more volatile than Taiwan Secom Co. It trades about 0.11 of its potential returns per unit of risk. Taiwan Secom Co is currently generating about 0.05 per unit of risk. If you would invest 4,800 in Shinkong Insurance Co on August 29, 2024 and sell it today you would earn a total of 5,130 from holding Shinkong Insurance Co or generate 106.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinkong Insurance Co vs. Taiwan Secom Co
Performance |
| Timeline |
| Shinkong Insurance |
| Taiwan Secom |
Shinkong Insurance and Taiwan Secom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Insurance and Taiwan Secom
The main advantage of trading using opposite Shinkong Insurance and Taiwan Secom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Insurance position performs unexpectedly, Taiwan Secom 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 Secom will offset losses from the drop in Taiwan Secom's long position.| Shinkong Insurance vs. Taiwan Secom Co | Shinkong Insurance vs. TTET Union Corp | Shinkong Insurance vs. China Steel Chemical | Shinkong Insurance vs. Taiwan Shin Kong |
| Taiwan Secom vs. Yulon Motor Co | Taiwan Secom vs. Far Eastern Department | Taiwan Secom vs. China Steel Corp | Taiwan Secom vs. Chang Hwa Commercial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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