Correlation Between Landis Taipei and Chung Lien
Can any of the company-specific risk be diversified away by investing in both Landis Taipei and Chung Lien 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 Landis Taipei and Chung Lien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Landis Taipei Hotel and Chung Lien Transportation, you can compare the effects of market volatilities on Landis Taipei and Chung Lien 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 Landis Taipei with a short position of Chung Lien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Landis Taipei and Chung Lien.
Diversification Opportunities for Landis Taipei and Chung Lien
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Landis and Chung is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Landis Taipei Hotel and Chung Lien Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Lien Transportation and Landis Taipei 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 Landis Taipei Hotel are associated (or correlated) with Chung Lien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Lien Transportation has no effect on the direction of Landis Taipei i.e., Landis Taipei and Chung Lien go up and down completely randomly.
Pair Corralation between Landis Taipei and Chung Lien
Assuming the 90 days trading horizon Landis Taipei Hotel is expected to generate 3.84 times more return on investment than Chung Lien. However, Landis Taipei is 3.84 times more volatile than Chung Lien Transportation. It trades about 0.01 of its potential returns per unit of risk. Chung Lien Transportation is currently generating about -0.06 per unit of risk. If you would invest 1,925 in Landis Taipei Hotel on September 1, 2024 and sell it today you would lose (125.00) from holding Landis Taipei Hotel or give up 6.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Landis Taipei Hotel vs. Chung Lien Transportation
Performance |
| Timeline |
| Landis Taipei Hotel |
| Chung Lien Transportation |
Landis Taipei and Chung Lien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Landis Taipei and Chung Lien
The main advantage of trading using opposite Landis Taipei and Chung Lien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Landis Taipei position performs unexpectedly, Chung Lien 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 Chung Lien will offset losses from the drop in Chung Lien's long position.| Landis Taipei vs. Formosa International Hotels | Landis Taipei vs. Ambassador Hotel | Landis Taipei vs. FDC International Hotels | Landis Taipei vs. First Hotel Co |
| Chung Lien vs. ADLINK Technology | Chung Lien vs. Chicony Power Technology | Chung Lien vs. Easywell Biomedicals | Chung Lien vs. Ching Feng Home |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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