Correlation Between Taiwan Speciality and Pacific Hospital
Can any of the company-specific risk be diversified away by investing in both Taiwan Speciality and Pacific Hospital 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 Speciality and Pacific Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Speciality Chemicals and Pacific Hospital Supply, you can compare the effects of market volatilities on Taiwan Speciality and Pacific Hospital 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 Speciality with a short position of Pacific Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Speciality and Pacific Hospital.
Diversification Opportunities for Taiwan Speciality and Pacific Hospital
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Pacific is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Speciality Chemicals and Pacific Hospital Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Hospital Supply and Taiwan Speciality 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 Speciality Chemicals are associated (or correlated) with Pacific Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Hospital Supply has no effect on the direction of Taiwan Speciality i.e., Taiwan Speciality and Pacific Hospital go up and down completely randomly.
Pair Corralation between Taiwan Speciality and Pacific Hospital
Assuming the 90 days trading horizon Taiwan Speciality Chemicals is expected to under-perform the Pacific Hospital. In addition to that, Taiwan Speciality is 3.51 times more volatile than Pacific Hospital Supply. It trades about -0.15 of its total potential returns per unit of risk. Pacific Hospital Supply is currently generating about 0.19 per unit of volatility. If you would invest 8,780 in Pacific Hospital Supply on September 2, 2024 and sell it today you would earn a total of 150.00 from holding Pacific Hospital Supply or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Speciality Chemicals vs. Pacific Hospital Supply
Performance |
| Timeline |
| Taiwan Speciality |
| Pacific Hospital Supply |
Taiwan Speciality and Pacific Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Speciality and Pacific Hospital
The main advantage of trading using opposite Taiwan Speciality and Pacific Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Speciality position performs unexpectedly, Pacific Hospital 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 Pacific Hospital will offset losses from the drop in Pacific Hospital's long position.| Taiwan Speciality vs. Taiwan Semiconductor Manufacturing | Taiwan Speciality vs. Hon Hai Precision | Taiwan Speciality vs. MediaTek | Taiwan Speciality vs. Chunghwa Telecom Co |
| Pacific Hospital vs. StShine Optical Co | Pacific Hospital vs. Bioteque | Pacific Hospital vs. United Orthopedic | Pacific Hospital vs. TTY Biopharm Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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