Correlation Between Chi Sheng and Taiwan Taomee
Can any of the company-specific risk be diversified away by investing in both Chi Sheng and Taiwan Taomee 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 Chi Sheng and Taiwan Taomee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chi Sheng Chemical and Taiwan Taomee Co, you can compare the effects of market volatilities on Chi Sheng and Taiwan Taomee 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 Chi Sheng with a short position of Taiwan Taomee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Sheng and Taiwan Taomee.
Diversification Opportunities for Chi Sheng and Taiwan Taomee
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chi and Taiwan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chi Sheng Chemical and Taiwan Taomee Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Taomee and Chi Sheng 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 Chi Sheng Chemical are associated (or correlated) with Taiwan Taomee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Taomee has no effect on the direction of Chi Sheng i.e., Chi Sheng and Taiwan Taomee go up and down completely randomly.
Pair Corralation between Chi Sheng and Taiwan Taomee
Assuming the 90 days trading horizon Chi Sheng Chemical is expected to generate 0.62 times more return on investment than Taiwan Taomee. However, Chi Sheng Chemical is 1.61 times less risky than Taiwan Taomee. It trades about 0.03 of its potential returns per unit of risk. Taiwan Taomee Co is currently generating about -0.02 per unit of risk. If you would invest 2,635 in Chi Sheng Chemical on September 3, 2024 and sell it today you would earn a total of 140.00 from holding Chi Sheng Chemical or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Sheng Chemical vs. Taiwan Taomee Co
Performance |
| Timeline |
| Chi Sheng Chemical |
| Taiwan Taomee |
Chi Sheng and Taiwan Taomee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Sheng and Taiwan Taomee
The main advantage of trading using opposite Chi Sheng and Taiwan Taomee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Sheng position performs unexpectedly, Taiwan Taomee 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 Taomee will offset losses from the drop in Taiwan Taomee's long position.| Chi Sheng vs. SciVision Biotech | Chi Sheng vs. WiseChip Semiconductor | Chi Sheng vs. Novatek Microelectronics Corp | Chi Sheng vs. Leader Electronics |
| Taiwan Taomee vs. U Media Communications | Taiwan Taomee vs. Ma Kuang Healthcare | Taiwan Taomee vs. STARLUX Airlines Co | Taiwan Taomee vs. Cameo Communications |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |