Correlation Between Les Enphants and Taiwan Tea
Can any of the company-specific risk be diversified away by investing in both Les Enphants and Taiwan Tea 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 Les Enphants and Taiwan Tea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Les Enphants Co and Taiwan Tea Corp, you can compare the effects of market volatilities on Les Enphants and Taiwan Tea 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 Les Enphants with a short position of Taiwan Tea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Enphants and Taiwan Tea.
Diversification Opportunities for Les Enphants and Taiwan Tea
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Les and Taiwan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Les Enphants Co and Taiwan Tea Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Tea Corp and Les Enphants 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 Les Enphants Co are associated (or correlated) with Taiwan Tea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Tea Corp has no effect on the direction of Les Enphants i.e., Les Enphants and Taiwan Tea go up and down completely randomly.
Pair Corralation between Les Enphants and Taiwan Tea
Assuming the 90 days trading horizon Les Enphants Co is expected to under-perform the Taiwan Tea. But the stock apears to be less risky and, when comparing its historical volatility, Les Enphants Co is 1.24 times less risky than Taiwan Tea. The stock trades about -0.34 of its potential returns per unit of risk. The Taiwan Tea Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,100 in Taiwan Tea Corp on September 4, 2024 and sell it today you would lose (30.00) from holding Taiwan Tea Corp or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Les Enphants Co vs. Taiwan Tea Corp
Performance |
| Timeline |
| Les Enphants |
| Taiwan Tea Corp |
Les Enphants and Taiwan Tea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Enphants and Taiwan Tea
The main advantage of trading using opposite Les Enphants and Taiwan Tea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Enphants position performs unexpectedly, Taiwan Tea 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 Tea will offset losses from the drop in Taiwan Tea's long position.| Les Enphants vs. Far Eastern Department | Les Enphants vs. Shin Shin Co | Les Enphants vs. First Hotel Co | Les Enphants vs. Hung Sheng Construction |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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