Correlation Between Taiwan Cooperative and Bank of Kaohsiung
Can any of the company-specific risk be diversified away by investing in both Taiwan Cooperative and Bank of Kaohsiung 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 Cooperative and Bank of Kaohsiung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Cooperative Financial and Bank of Kaohsiung, you can compare the effects of market volatilities on Taiwan Cooperative and Bank of Kaohsiung 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 Cooperative with a short position of Bank of Kaohsiung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cooperative and Bank of Kaohsiung.
Diversification Opportunities for Taiwan Cooperative and Bank of Kaohsiung
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Bank is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cooperative Financial and Bank of Kaohsiung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Kaohsiung and Taiwan Cooperative 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 Cooperative Financial are associated (or correlated) with Bank of Kaohsiung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Kaohsiung has no effect on the direction of Taiwan Cooperative i.e., Taiwan Cooperative and Bank of Kaohsiung go up and down completely randomly.
Pair Corralation between Taiwan Cooperative and Bank of Kaohsiung
Assuming the 90 days trading horizon Taiwan Cooperative Financial is expected to under-perform the Bank of Kaohsiung. In addition to that, Taiwan Cooperative is 1.1 times more volatile than Bank of Kaohsiung. It trades about -0.01 of its total potential returns per unit of risk. Bank of Kaohsiung is currently generating about -0.02 per unit of volatility. If you would invest 1,235 in Bank of Kaohsiung on September 2, 2024 and sell it today you would lose (75.00) from holding Bank of Kaohsiung or give up 6.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Cooperative Financial vs. Bank of Kaohsiung
Performance |
| Timeline |
| Taiwan Cooperative |
| Bank of Kaohsiung |
Taiwan Cooperative and Bank of Kaohsiung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cooperative and Bank of Kaohsiung
The main advantage of trading using opposite Taiwan Cooperative and Bank of Kaohsiung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cooperative position performs unexpectedly, Bank of Kaohsiung 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 Bank of Kaohsiung will offset losses from the drop in Bank of Kaohsiung's long position.| Taiwan Cooperative vs. Central Reinsurance Corp | Taiwan Cooperative vs. Huaku Development Co | Taiwan Cooperative vs. Fubon Financial Holding |
| Bank of Kaohsiung vs. Central Reinsurance Corp | Bank of Kaohsiung vs. Huaku Development Co | Bank of Kaohsiung vs. Fubon Financial Holding |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |