Correlation Between Taishin Financial and Taiwan Taomee
Can any of the company-specific risk be diversified away by investing in both Taishin Financial and Taiwan Taomee 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 Taiwan Taomee 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 Taiwan Taomee Co, you can compare the effects of market volatilities on Taishin Financial and Taiwan Taomee 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 Taiwan Taomee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taishin Financial and Taiwan Taomee.
Diversification Opportunities for Taishin Financial and Taiwan Taomee
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taishin and Taiwan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Taishin Financial Holding and Taiwan Taomee Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Taomee 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 Taiwan Taomee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Taomee has no effect on the direction of Taishin Financial i.e., Taishin Financial and Taiwan Taomee go up and down completely randomly.
Pair Corralation between Taishin Financial and Taiwan Taomee
Assuming the 90 days trading horizon Taishin Financial is expected to generate 3.34 times less return on investment than Taiwan Taomee. But when comparing it to its historical volatility, Taishin Financial Holding is 6.5 times less risky than Taiwan Taomee. It trades about 0.07 of its potential returns per unit of risk. Taiwan Taomee Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,015 in Taiwan Taomee Co on September 12, 2024 and sell it today you would earn a total of 10.00 from holding Taiwan Taomee Co or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Taishin Financial Holding vs. Taiwan Taomee Co
Performance |
| Timeline |
| Taishin Financial Holding |
| Taiwan Taomee |
Taishin Financial and Taiwan Taomee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taishin Financial and Taiwan Taomee
The main advantage of trading using opposite Taishin Financial and Taiwan Taomee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taishin Financial position performs unexpectedly, Taiwan Taomee 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 Taomee will offset losses from the drop in Taiwan Taomee'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 |
| Taiwan Taomee vs. Taishin Financial Holding | Taiwan Taomee vs. PChome Online | Taiwan Taomee vs. Fubon Financial Holding | Taiwan Taomee vs. Hua Nan 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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