Correlation Between Shanghai Commercial and Taiwan Weighted
Can any of the company-specific risk be diversified away by investing in both Shanghai Commercial and Taiwan Weighted 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 Shanghai Commercial and Taiwan Weighted into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Commercial Savings and Taiwan Weighted, you can compare the effects of market volatilities on Shanghai Commercial and Taiwan Weighted 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 Shanghai Commercial with a short position of Taiwan Weighted. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Commercial and Taiwan Weighted.
Diversification Opportunities for Shanghai Commercial and Taiwan Weighted
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shanghai and Taiwan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Commercial Savings and Taiwan Weighted in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Weighted and Shanghai Commercial 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 Shanghai Commercial Savings are associated (or correlated) with Taiwan Weighted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Weighted has no effect on the direction of Shanghai Commercial i.e., Shanghai Commercial and Taiwan Weighted go up and down completely randomly.
Pair Corralation between Shanghai Commercial and Taiwan Weighted
Assuming the 90 days trading horizon Shanghai Commercial Savings is expected to under-perform the Taiwan Weighted. In addition to that, Shanghai Commercial is 1.04 times more volatile than Taiwan Weighted. It trades about -0.01 of its total potential returns per unit of risk. Taiwan Weighted is currently generating about 0.1 per unit of volatility. If you would invest 1,428,513 in Taiwan Weighted on September 14, 2024 and sell it today you would earn a total of 876,167 from holding Taiwan Weighted or generate 61.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.75% |
| Values | Daily Returns |
Shanghai Commercial Savings vs. Taiwan Weighted
Performance |
| Timeline |
Shanghai Commercial and Taiwan Weighted Volatility Contrast
Predicted Return Density |
| Returns |
Shanghai Commercial Savings
Pair trading matchups for Shanghai Commercial
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Pair Trading with Shanghai Commercial and Taiwan Weighted
The main advantage of trading using opposite Shanghai Commercial and Taiwan Weighted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Commercial position performs unexpectedly, Taiwan Weighted 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 Taiwan Weighted will offset losses from the drop in Taiwan Weighted's long position.| Shanghai Commercial vs. Mega Financial Holding | Shanghai Commercial vs. Yuanta Financial Holdings | Shanghai Commercial vs. ESUN Financial Holding | Shanghai Commercial vs. Taiwan Cooperative Financial |
| Taiwan Weighted vs. Asia Metal Industries | Taiwan Weighted vs. Chinese Gamer International | Taiwan Weighted vs. Great China Metal | Taiwan Weighted vs. GAME HOURS |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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