Correlation Between Taiwan Cooperative and Grand Ocean
Can any of the company-specific risk be diversified away by investing in both Taiwan Cooperative and Grand Ocean 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 Grand Ocean 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 Grand Ocean Retail, you can compare the effects of market volatilities on Taiwan Cooperative and Grand Ocean 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 Grand Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cooperative and Grand Ocean.
Diversification Opportunities for Taiwan Cooperative and Grand Ocean
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Grand is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cooperative Financial and Grand Ocean Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Ocean Retail 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 Grand Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Ocean Retail has no effect on the direction of Taiwan Cooperative i.e., Taiwan Cooperative and Grand Ocean go up and down completely randomly.
Pair Corralation between Taiwan Cooperative and Grand Ocean
Assuming the 90 days trading horizon Taiwan Cooperative Financial is expected to under-perform the Grand Ocean. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Cooperative Financial is 6.63 times less risky than Grand Ocean. The stock trades about -0.07 of its potential returns per unit of risk. The Grand Ocean Retail is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,170 in Grand Ocean Retail on September 2, 2024 and sell it today you would earn a total of 55.00 from holding Grand Ocean Retail or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Cooperative Financial vs. Grand Ocean Retail
Performance |
| Timeline |
| Taiwan Cooperative |
| Grand Ocean Retail |
Taiwan Cooperative and Grand Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cooperative and Grand Ocean
The main advantage of trading using opposite Taiwan Cooperative and Grand Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cooperative position performs unexpectedly, Grand Ocean 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 Grand Ocean will offset losses from the drop in Grand Ocean's long position.| Taiwan Cooperative vs. Central Reinsurance Corp | Taiwan Cooperative vs. Huaku Development Co | Taiwan Cooperative vs. Fubon Financial Holding |
| Grand Ocean vs. First Steamship Co | Grand Ocean vs. Far Eastern Department | Grand Ocean vs. LongDa Construction Development | Grand Ocean vs. Collins 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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