Correlation Between Taiwan Speciality and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both Taiwan Speciality and Asia Electronic 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 Asia Electronic 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 Asia Electronic Material, you can compare the effects of market volatilities on Taiwan Speciality and Asia Electronic 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 Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Speciality and Asia Electronic.
Diversification Opportunities for Taiwan Speciality and Asia Electronic
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Asia is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Speciality Chemicals and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material 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 Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of Taiwan Speciality i.e., Taiwan Speciality and Asia Electronic go up and down completely randomly.
Pair Corralation between Taiwan Speciality and Asia Electronic
Assuming the 90 days trading horizon Taiwan Speciality Chemicals is expected to generate 1.23 times more return on investment than Asia Electronic. However, Taiwan Speciality is 1.23 times more volatile than Asia Electronic Material. It trades about 0.4 of its potential returns per unit of risk. Asia Electronic Material is currently generating about 0.02 per unit of risk. If you would invest 16,450 in Taiwan Speciality Chemicals on October 12, 2024 and sell it today you would earn a total of 2,900 from holding Taiwan Speciality Chemicals or generate 17.63% 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. Asia Electronic Material
Performance |
| Timeline |
| Taiwan Speciality |
| Asia Electronic Material |
Taiwan Speciality and Asia Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Speciality and Asia Electronic
The main advantage of trading using opposite Taiwan Speciality and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Speciality position performs unexpectedly, Asia Electronic 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 Asia Electronic will offset losses from the drop in Asia Electronic's long position.| Taiwan Speciality vs. U Ming Marine Transport | Taiwan Speciality vs. CHINA DEVELOPMENT FINANCIAL | Taiwan Speciality vs. IBF Financial Holdings | Taiwan Speciality vs. China Development Financial |
| Asia Electronic vs. Shinkong Synthetic Fiber | Asia Electronic vs. C Media Electronics | Asia Electronic vs. Taiwan Speciality Chemicals | Asia Electronic vs. Mechema Chemicals Int |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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