Correlation Between Taishin Financial and Founding Construction
Can any of the company-specific risk be diversified away by investing in both Taishin Financial and Founding Construction 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 Taishin Financial and Founding Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taishin Financial Holding and Founding Construction Development, you can compare the effects of market volatilities on Taishin Financial and Founding Construction 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 Taishin Financial with a short position of Founding Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taishin Financial and Founding Construction.
Diversification Opportunities for Taishin Financial and Founding Construction
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taishin and Founding is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Taishin Financial Holding and Founding Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Founding Construction and Taishin 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 Taishin Financial Holding are associated (or correlated) with Founding Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Founding Construction has no effect on the direction of Taishin Financial i.e., Taishin Financial and Founding Construction go up and down completely randomly.
Pair Corralation between Taishin Financial and Founding Construction
Assuming the 90 days trading horizon Taishin Financial is expected to generate 13.06 times less return on investment than Founding Construction. But when comparing it to its historical volatility, Taishin Financial Holding is 4.01 times less risky than Founding Construction. It trades about 0.01 of its potential returns per unit of risk. Founding Construction Development is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,765 in Founding Construction Development on September 3, 2024 and sell it today you would earn a total of 325.00 from holding Founding Construction Development or generate 18.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taishin Financial Holding vs. Founding Construction Developm
Performance |
| Timeline |
| Taishin Financial Holding |
| Founding Construction |
Taishin Financial and Founding Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taishin Financial and Founding Construction
The main advantage of trading using opposite Taishin Financial and Founding Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taishin Financial position performs unexpectedly, Founding Construction 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 Founding Construction will offset losses from the drop in Founding Construction's long position.| Taishin Financial vs. Mega Financial Holding | Taishin Financial vs. Taiwan Cooperative Financial | Taishin Financial vs. ESUN Financial Holding | Taishin Financial vs. First Financial Holding |
| Founding Construction vs. Huaku Development Co | Founding Construction vs. Ruentex Development Co | Founding Construction vs. Taiwan Cement Corp | Founding Construction vs. Symtek Automation Asia |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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