Correlation Between ESUN Financial and Taiwan Fire
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and Taiwan Fire 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 ESUN Financial and Taiwan Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESUN Financial Holding and Taiwan Fire Marine, you can compare the effects of market volatilities on ESUN Financial and Taiwan Fire 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 ESUN Financial with a short position of Taiwan Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and Taiwan Fire.
Diversification Opportunities for ESUN Financial and Taiwan Fire
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between ESUN and Taiwan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and Taiwan Fire Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Fire Marine and ESUN Financial 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 ESUN Financial Holding are associated (or correlated) with Taiwan Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Fire Marine has no effect on the direction of ESUN Financial i.e., ESUN Financial and Taiwan Fire go up and down completely randomly.
Pair Corralation between ESUN Financial and Taiwan Fire
Assuming the 90 days trading horizon ESUN Financial is expected to generate 2.03 times less return on investment than Taiwan Fire. In addition to that, ESUN Financial is 1.11 times more volatile than Taiwan Fire Marine. It trades about 0.01 of its total potential returns per unit of risk. Taiwan Fire Marine is currently generating about 0.02 per unit of volatility. If you would invest 2,760 in Taiwan Fire Marine on October 12, 2024 and sell it today you would earn a total of 110.00 from holding Taiwan Fire Marine or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
ESUN Financial Holding vs. Taiwan Fire Marine
Performance |
| Timeline |
| ESUN Financial Holding |
| Taiwan Fire Marine |
ESUN Financial and Taiwan Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and Taiwan Fire
The main advantage of trading using opposite ESUN Financial and Taiwan Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, Taiwan Fire 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 Fire will offset losses from the drop in Taiwan Fire's long position.| ESUN Financial vs. Mega Financial Holding | ESUN Financial vs. CTBC Financial Holding | ESUN Financial vs. First Financial Holding | ESUN Financial vs. Fubon Financial Holding |
| Taiwan Fire vs. Mega Financial Holding | Taiwan Fire vs. Yuanta Financial Holdings | Taiwan Fire vs. ESUN Financial Holding | Taiwan Fire vs. Taiwan Cooperative Financial |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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