Correlation Between Taiwan Mobile and Shinkong Synthetic
Can any of the company-specific risk be diversified away by investing in both Taiwan Mobile and Shinkong Synthetic 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 Mobile and Shinkong Synthetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Mobile Co and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on Taiwan Mobile and Shinkong Synthetic 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 Mobile with a short position of Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Mobile and Shinkong Synthetic.
Diversification Opportunities for Taiwan Mobile and Shinkong Synthetic
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Taiwan and Shinkong is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Mobile Co and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber and Taiwan Mobile 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 Mobile Co are associated (or correlated) with Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of Taiwan Mobile i.e., Taiwan Mobile and Shinkong Synthetic go up and down completely randomly.
Pair Corralation between Taiwan Mobile and Shinkong Synthetic
Assuming the 90 days trading horizon Taiwan Mobile Co is expected to generate 0.7 times more return on investment than Shinkong Synthetic. However, Taiwan Mobile Co is 1.42 times less risky than Shinkong Synthetic. It trades about 0.06 of its potential returns per unit of risk. Shinkong Synthetic Fiber is currently generating about 0.02 per unit of risk. If you would invest 9,770 in Taiwan Mobile Co on September 1, 2024 and sell it today you would earn a total of 1,530 from holding Taiwan Mobile Co or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Mobile Co vs. Shinkong Synthetic Fiber
Performance |
| Timeline |
| Taiwan Mobile |
| Shinkong Synthetic Fiber |
Taiwan Mobile and Shinkong Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Mobile and Shinkong Synthetic
The main advantage of trading using opposite Taiwan Mobile and Shinkong Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Mobile position performs unexpectedly, Shinkong Synthetic 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 Shinkong Synthetic will offset losses from the drop in Shinkong Synthetic's long position.| Taiwan Mobile vs. Chunghwa Telecom Co | Taiwan Mobile vs. President Chain Store | Taiwan Mobile vs. Formosa Petrochemical Corp | Taiwan Mobile vs. Formosa Chemicals Fibre |
| Shinkong Synthetic vs. Basso Industry Corp | Shinkong Synthetic vs. Chung Hsin Electric Machinery | Shinkong Synthetic vs. TYC Brother Industrial | Shinkong Synthetic vs. TECO Electric Machinery |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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