Correlation Between Taiwan Speciality and Tachan Securities
Can any of the company-specific risk be diversified away by investing in both Taiwan Speciality and Tachan Securities 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 Tachan Securities 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 Tachan Securities Co, you can compare the effects of market volatilities on Taiwan Speciality and Tachan Securities 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 Tachan Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Speciality and Tachan Securities.
Diversification Opportunities for Taiwan Speciality and Tachan Securities
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Tachan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Speciality Chemicals and Tachan Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tachan Securities 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 Tachan Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tachan Securities has no effect on the direction of Taiwan Speciality i.e., Taiwan Speciality and Tachan Securities go up and down completely randomly.
Pair Corralation between Taiwan Speciality and Tachan Securities
Assuming the 90 days trading horizon Taiwan Speciality Chemicals is expected to generate 4.22 times more return on investment than Tachan Securities. However, Taiwan Speciality is 4.22 times more volatile than Tachan Securities Co. It trades about 0.06 of its potential returns per unit of risk. Tachan Securities Co is currently generating about 0.03 per unit of risk. If you would invest 8,964 in Taiwan Speciality Chemicals on September 14, 2024 and sell it today you would earn a total of 7,336 from holding Taiwan Speciality Chemicals or generate 81.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan Speciality Chemicals vs. Tachan Securities Co
Performance |
| Timeline |
| Taiwan Speciality |
| Tachan Securities |
Taiwan Speciality and Tachan Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Speciality and Tachan Securities
The main advantage of trading using opposite Taiwan Speciality and Tachan Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Speciality position performs unexpectedly, Tachan Securities 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 Tachan Securities will offset losses from the drop in Tachan Securities' long position.| Taiwan Speciality vs. Taiwan Semiconductor Manufacturing | Taiwan Speciality vs. Hon Hai Precision | Taiwan Speciality vs. MediaTek | Taiwan Speciality vs. Chunghwa Telecom Co |
| Tachan Securities vs. Mechema Chemicals Int | Tachan Securities vs. Yong Shun Chemical | Tachan Securities vs. Sports Gear Co | Tachan Securities vs. Taiwan Speciality Chemicals |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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