Correlation Between Taishin Financial and Interactive Digital
Can any of the company-specific risk be diversified away by investing in both Taishin Financial and Interactive Digital 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 Interactive Digital 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 Interactive Digital Technologies, you can compare the effects of market volatilities on Taishin Financial and Interactive Digital 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 Interactive Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taishin Financial and Interactive Digital.
Diversification Opportunities for Taishin Financial and Interactive Digital
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taishin and Interactive is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Taishin Financial Holding and Interactive Digital Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Digital 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 Interactive Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Digital has no effect on the direction of Taishin Financial i.e., Taishin Financial and Interactive Digital go up and down completely randomly.
Pair Corralation between Taishin Financial and Interactive Digital
Assuming the 90 days trading horizon Taishin Financial Holding is expected to generate 0.31 times more return on investment than Interactive Digital. However, Taishin Financial Holding is 3.23 times less risky than Interactive Digital. It trades about 0.1 of its potential returns per unit of risk. Interactive Digital Technologies is currently generating about 0.0 per unit of risk. If you would invest 4,685 in Taishin Financial Holding on November 4, 2024 and sell it today you would earn a total of 10.00 from holding Taishin Financial Holding or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taishin Financial Holding vs. Interactive Digital Technologi
Performance |
| Timeline |
| Taishin Financial Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Interactive Digital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Taishin Financial and Interactive Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taishin Financial and Interactive Digital
The main advantage of trading using opposite Taishin Financial and Interactive Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taishin Financial position performs unexpectedly, Interactive Digital 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 Interactive Digital will offset losses from the drop in Interactive Digital's long position.The idea behind Taishin Financial Holding and Interactive Digital Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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