Correlation Between San Fu and Taiwan Fu
Can any of the company-specific risk be diversified away by investing in both San Fu and Taiwan Fu 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 San Fu and Taiwan Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Fu Chemical and Taiwan Fu Hsing, you can compare the effects of market volatilities on San Fu and Taiwan Fu 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 San Fu with a short position of Taiwan Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Fu and Taiwan Fu.
Diversification Opportunities for San Fu and Taiwan Fu
Very weak diversification
The 3 months correlation between San and Taiwan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding San Fu Chemical and Taiwan Fu Hsing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Fu Hsing and San Fu 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 San Fu Chemical are associated (or correlated) with Taiwan Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Fu Hsing has no effect on the direction of San Fu i.e., San Fu and Taiwan Fu go up and down completely randomly.
Pair Corralation between San Fu and Taiwan Fu
Assuming the 90 days trading horizon San Fu Chemical is expected to under-perform the Taiwan Fu. In addition to that, San Fu is 2.26 times more volatile than Taiwan Fu Hsing. It trades about -0.01 of its total potential returns per unit of risk. Taiwan Fu Hsing is currently generating about 0.1 per unit of volatility. If you would invest 5,190 in Taiwan Fu Hsing on December 1, 2024 and sell it today you would earn a total of 60.00 from holding Taiwan Fu Hsing or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
San Fu Chemical vs. Taiwan Fu Hsing
Performance |
| Timeline |
| San Fu Chemical |
| Taiwan Fu Hsing |
San Fu and Taiwan Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Fu and Taiwan Fu
The main advantage of trading using opposite San Fu and Taiwan Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Fu position performs unexpectedly, Taiwan Fu 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 Fu will offset losses from the drop in Taiwan Fu's long position.| San Fu vs. Nuvoton Technology Corp | San Fu vs. Shiny Chemical Industrial | San Fu vs. Jinan Acetate Chemical | San Fu vs. Coremax Corp |
| Taiwan Fu vs. Taiwan Shin Kong | Taiwan Fu vs. Taiwan Secom Co | Taiwan Fu vs. Pou Chen Corp | Taiwan Fu vs. Taiwan Hon Chuan |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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