Correlation Between IBF Financial and Taiwan Speciality
Can any of the company-specific risk be diversified away by investing in both IBF Financial and Taiwan Speciality 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 IBF Financial and Taiwan Speciality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBF Financial Holdings and Taiwan Speciality Chemicals, you can compare the effects of market volatilities on IBF Financial and Taiwan Speciality 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 IBF Financial with a short position of Taiwan Speciality. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBF Financial and Taiwan Speciality.
Diversification Opportunities for IBF Financial and Taiwan Speciality
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between IBF and Taiwan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding IBF Financial Holdings and Taiwan Speciality Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Speciality and IBF 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 IBF Financial Holdings are associated (or correlated) with Taiwan Speciality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Speciality has no effect on the direction of IBF Financial i.e., IBF Financial and Taiwan Speciality go up and down completely randomly.
Pair Corralation between IBF Financial and Taiwan Speciality
Assuming the 90 days trading horizon IBF Financial is expected to generate 4.3 times less return on investment than Taiwan Speciality. But when comparing it to its historical volatility, IBF Financial Holdings is 2.05 times less risky than Taiwan Speciality. It trades about 0.03 of its potential returns per unit of risk. Taiwan Speciality Chemicals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,063 in Taiwan Speciality Chemicals on October 12, 2024 and sell it today you would earn a total of 10,287 from holding Taiwan Speciality Chemicals or generate 113.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
IBF Financial Holdings vs. Taiwan Speciality Chemicals
Performance |
| Timeline |
| IBF Financial Holdings |
| Taiwan Speciality |
IBF Financial and Taiwan Speciality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBF Financial and Taiwan Speciality
The main advantage of trading using opposite IBF Financial and Taiwan Speciality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBF Financial position performs unexpectedly, Taiwan Speciality 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 Speciality will offset losses from the drop in Taiwan Speciality's long position.| IBF Financial vs. Mercuries Data Systems | IBF Financial vs. Holtek Semiconductor | IBF Financial vs. Insyde Software | IBF Financial vs. Sinopower Semiconductor |
| Taiwan Speciality vs. Forest Water Environmental | Taiwan Speciality vs. Wei Chuan Foods | Taiwan Speciality vs. Sunmax Biotechnology Co | Taiwan Speciality vs. Hunya Foods Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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