Correlation Between Shih Wei and Taiyen Biotech
Can any of the company-specific risk be diversified away by investing in both Shih Wei and Taiyen Biotech 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 Shih Wei and Taiyen Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shih Wei Navigation and Taiyen Biotech Co, you can compare the effects of market volatilities on Shih Wei and Taiyen Biotech 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 Shih Wei with a short position of Taiyen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shih Wei and Taiyen Biotech.
Diversification Opportunities for Shih Wei and Taiyen Biotech
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shih and Taiyen is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shih Wei Navigation and Taiyen Biotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiyen Biotech and Shih Wei 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 Shih Wei Navigation are associated (or correlated) with Taiyen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiyen Biotech has no effect on the direction of Shih Wei i.e., Shih Wei and Taiyen Biotech go up and down completely randomly.
Pair Corralation between Shih Wei and Taiyen Biotech
Assuming the 90 days trading horizon Shih Wei Navigation is expected to generate 3.66 times more return on investment than Taiyen Biotech. However, Shih Wei is 3.66 times more volatile than Taiyen Biotech Co. It trades about 0.04 of its potential returns per unit of risk. Taiyen Biotech Co is currently generating about -0.32 per unit of risk. If you would invest 1,745 in Shih Wei Navigation on September 1, 2024 and sell it today you would earn a total of 25.00 from holding Shih Wei Navigation or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shih Wei Navigation vs. Taiyen Biotech Co
Performance |
| Timeline |
| Shih Wei Navigation |
| Taiyen Biotech |
Shih Wei and Taiyen Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shih Wei and Taiyen Biotech
The main advantage of trading using opposite Shih Wei and Taiyen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shih Wei position performs unexpectedly, Taiyen Biotech 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 Taiyen Biotech will offset losses from the drop in Taiyen Biotech's long position.| Shih Wei vs. BES Engineering Co | Shih Wei vs. Continental Holdings Corp | Shih Wei vs. Kee Tai Properties | Shih Wei vs. Hung Sheng Construction |
| Taiyen Biotech vs. De Licacy Industrial | Taiyen Biotech vs. Wisher Industrial Co | Taiyen Biotech vs. Tainan Enterprises 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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