Correlation Between Yong Shun and Tainan Spinning
Can any of the company-specific risk be diversified away by investing in both Yong Shun and Tainan Spinning 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 Yong Shun and Tainan Spinning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yong Shun Chemical and Tainan Spinning Co, you can compare the effects of market volatilities on Yong Shun and Tainan Spinning 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 Yong Shun with a short position of Tainan Spinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yong Shun and Tainan Spinning.
Diversification Opportunities for Yong Shun and Tainan Spinning
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yong and Tainan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Yong Shun Chemical and Tainan Spinning Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Spinning and Yong Shun 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 Yong Shun Chemical are associated (or correlated) with Tainan Spinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Spinning has no effect on the direction of Yong Shun i.e., Yong Shun and Tainan Spinning go up and down completely randomly.
Pair Corralation between Yong Shun and Tainan Spinning
Assuming the 90 days trading horizon Yong Shun Chemical is expected to under-perform the Tainan Spinning. But the stock apears to be less risky and, when comparing its historical volatility, Yong Shun Chemical is 1.02 times less risky than Tainan Spinning. The stock trades about -0.11 of its potential returns per unit of risk. The Tainan Spinning Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,510 in Tainan Spinning Co on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Tainan Spinning Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yong Shun Chemical vs. Tainan Spinning Co
Performance |
| Timeline |
| Yong Shun Chemical |
| Tainan Spinning |
Yong Shun and Tainan Spinning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yong Shun and Tainan Spinning
The main advantage of trading using opposite Yong Shun and Tainan Spinning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yong Shun position performs unexpectedly, Tainan Spinning 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 Tainan Spinning will offset losses from the drop in Tainan Spinning's long position.| Yong Shun vs. Tainan Spinning Co | Yong Shun vs. Lealea Enterprise Co | Yong Shun vs. China Petrochemical Development | Yong Shun vs. Ruentex Development Co |
| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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