Correlation Between President Chain and Taiwan Shin
Can any of the company-specific risk be diversified away by investing in both President Chain and Taiwan Shin 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 President Chain and Taiwan Shin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between President Chain Store and Taiwan Shin Kong, you can compare the effects of market volatilities on President Chain and Taiwan Shin 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 President Chain with a short position of Taiwan Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Chain and Taiwan Shin.
Diversification Opportunities for President Chain and Taiwan Shin
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between President and Taiwan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding President Chain Store and Taiwan Shin Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Shin Kong and President Chain 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 President Chain Store are associated (or correlated) with Taiwan Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Shin Kong has no effect on the direction of President Chain i.e., President Chain and Taiwan Shin go up and down completely randomly.
Pair Corralation between President Chain and Taiwan Shin
Assuming the 90 days trading horizon President Chain is expected to generate 5.29 times less return on investment than Taiwan Shin. In addition to that, President Chain is 1.54 times more volatile than Taiwan Shin Kong. It trades about 0.0 of its total potential returns per unit of risk. Taiwan Shin Kong is currently generating about 0.03 per unit of volatility. If you would invest 3,809 in Taiwan Shin Kong on October 25, 2024 and sell it today you would earn a total of 286.00 from holding Taiwan Shin Kong or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
President Chain Store vs. Taiwan Shin Kong
Performance |
| Timeline |
| President Chain Store |
| Taiwan Shin Kong |
President Chain and Taiwan Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Chain and Taiwan Shin
The main advantage of trading using opposite President Chain and Taiwan Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Chain position performs unexpectedly, Taiwan Shin 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 Shin will offset losses from the drop in Taiwan Shin's long position.| President Chain vs. Uni President Enterprises Corp | President Chain vs. Formosa Plastics Corp | President Chain vs. Chunghwa Telecom Co | President Chain vs. Fubon Financial Holding |
| Taiwan Shin vs. Taiwan Secom Co | Taiwan Shin vs. Yulon Finance Corp | Taiwan Shin vs. CHC Resources Corp | Taiwan Shin vs. Nak Sealing Technologies |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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