Correlation Between Taiwan Tea and Kee Tai
Can any of the company-specific risk be diversified away by investing in both Taiwan Tea and Kee Tai 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 Taiwan Tea and Kee Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Tea Corp and Kee Tai Properties, you can compare the effects of market volatilities on Taiwan Tea and Kee Tai 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 Taiwan Tea with a short position of Kee Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Tea and Kee Tai.
Diversification Opportunities for Taiwan Tea and Kee Tai
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Kee is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Tea Corp and Kee Tai Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kee Tai Properties and Taiwan Tea 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 Taiwan Tea Corp are associated (or correlated) with Kee Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kee Tai Properties has no effect on the direction of Taiwan Tea i.e., Taiwan Tea and Kee Tai go up and down completely randomly.
Pair Corralation between Taiwan Tea and Kee Tai
Assuming the 90 days trading horizon Taiwan Tea Corp is expected to generate 0.67 times more return on investment than Kee Tai. However, Taiwan Tea Corp is 1.5 times less risky than Kee Tai. It trades about -0.01 of its potential returns per unit of risk. Kee Tai Properties is currently generating about -0.01 per unit of risk. If you would invest 2,125 in Taiwan Tea Corp on August 26, 2024 and sell it today you would lose (80.00) from holding Taiwan Tea Corp or give up 3.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Tea Corp vs. Kee Tai Properties
Performance |
| Timeline |
| Taiwan Tea Corp |
| Kee Tai Properties |
Taiwan Tea and Kee Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Tea and Kee Tai
The main advantage of trading using opposite Taiwan Tea and Kee Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Tea position performs unexpectedly, Kee Tai 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 Kee Tai will offset losses from the drop in Kee Tai's long position.| Taiwan Tea vs. Far Eastern Department | Taiwan Tea vs. BES Engineering Co | Taiwan Tea vs. Ton Yi Industrial | Taiwan Tea vs. Evergreen International Storage |
| Kee Tai vs. Chainqui Construction Development | Kee Tai vs. Zinwell | Kee Tai vs. Symtek Automation Asia | Kee Tai vs. CTCI Corp |
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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