Correlation Between Hua Nan and Taiwan Cooperative
Can any of the company-specific risk be diversified away by investing in both Hua Nan and Taiwan Cooperative 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 Hua Nan and Taiwan Cooperative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Nan Financial and Taiwan Cooperative Financial, you can compare the effects of market volatilities on Hua Nan and Taiwan Cooperative 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 Hua Nan with a short position of Taiwan Cooperative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Nan and Taiwan Cooperative.
Diversification Opportunities for Hua Nan and Taiwan Cooperative
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hua and Taiwan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hua Nan Financial and Taiwan Cooperative Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cooperative and Hua Nan 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 Hua Nan Financial are associated (or correlated) with Taiwan Cooperative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cooperative has no effect on the direction of Hua Nan i.e., Hua Nan and Taiwan Cooperative go up and down completely randomly.
Pair Corralation between Hua Nan and Taiwan Cooperative
Assuming the 90 days trading horizon Hua Nan Financial is expected to generate 1.12 times more return on investment than Taiwan Cooperative. However, Hua Nan is 1.12 times more volatile than Taiwan Cooperative Financial. It trades about 0.0 of its potential returns per unit of risk. Taiwan Cooperative Financial is currently generating about -0.1 per unit of risk. If you would invest 2,555 in Hua Nan Financial on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Hua Nan Financial or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Nan Financial vs. Taiwan Cooperative Financial
Performance |
| Timeline |
| Hua Nan Financial |
| Taiwan Cooperative |
Hua Nan and Taiwan Cooperative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Nan and Taiwan Cooperative
The main advantage of trading using opposite Hua Nan and Taiwan Cooperative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Nan position performs unexpectedly, Taiwan Cooperative 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 Cooperative will offset losses from the drop in Taiwan Cooperative's long position.| Hua Nan vs. First Financial Holding | Hua Nan vs. Mega Financial Holding | Hua Nan vs. CTBC Financial Holding | Hua Nan vs. ESUN Financial Holding |
| Taiwan Cooperative vs. First Financial Holding | Taiwan Cooperative vs. Hua Nan Financial | Taiwan Cooperative vs. Mega Financial Holding | Taiwan Cooperative vs. ESUN Financial Holding |
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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