Correlation Between Taiwan Allied and Iron Force
Can any of the company-specific risk be diversified away by investing in both Taiwan Allied and Iron Force 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 Allied and Iron Force into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Allied Container and Iron Force Industrial, you can compare the effects of market volatilities on Taiwan Allied and Iron Force 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 Allied with a short position of Iron Force. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Allied and Iron Force.
Diversification Opportunities for Taiwan Allied and Iron Force
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Iron is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Allied Container and Iron Force Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Force Industrial and Taiwan Allied 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 Allied Container are associated (or correlated) with Iron Force. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Force Industrial has no effect on the direction of Taiwan Allied i.e., Taiwan Allied and Iron Force go up and down completely randomly.
Pair Corralation between Taiwan Allied and Iron Force
Assuming the 90 days trading horizon Taiwan Allied Container is expected to generate 0.57 times more return on investment than Iron Force. However, Taiwan Allied Container is 1.76 times less risky than Iron Force. It trades about -0.01 of its potential returns per unit of risk. Iron Force Industrial is currently generating about -0.05 per unit of risk. If you would invest 3,720 in Taiwan Allied Container on September 2, 2024 and sell it today you would lose (140.00) from holding Taiwan Allied Container or give up 3.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Taiwan Allied Container vs. Iron Force Industrial
Performance |
| Timeline |
| Taiwan Allied Container |
| Iron Force Industrial |
Taiwan Allied and Iron Force Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Allied and Iron Force
The main advantage of trading using opposite Taiwan Allied and Iron Force positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Allied position performs unexpectedly, Iron Force 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 Iron Force will offset losses from the drop in Iron Force's long position.| Taiwan Allied vs. WinMate Communication INC | Taiwan Allied vs. Emerging Display Technologies | Taiwan Allied vs. International CSRC Investment | Taiwan Allied vs. Farglory FTZ Investment |
| Iron Force vs. Hota Industrial Mfg | Iron Force vs. Cub Elecparts | Iron Force vs. Yulon Nissan Motor | Iron Force vs. Tong Yang Industry |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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