Correlation Between Taiwan Cooperative and U Media
Can any of the company-specific risk be diversified away by investing in both Taiwan Cooperative and U Media 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 U Media 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 U Media Communications, you can compare the effects of market volatilities on Taiwan Cooperative and U Media 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 U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cooperative and U Media.
Diversification Opportunities for Taiwan Cooperative and U Media
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and 6470 is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cooperative Financial and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications 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 U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of Taiwan Cooperative i.e., Taiwan Cooperative and U Media go up and down completely randomly.
Pair Corralation between Taiwan Cooperative and U Media
Assuming the 90 days trading horizon Taiwan Cooperative Financial is expected to generate 0.57 times more return on investment than U Media. However, Taiwan Cooperative Financial is 1.77 times less risky than U Media. It trades about -0.02 of its potential returns per unit of risk. U Media Communications is currently generating about -0.06 per unit of risk. If you would invest 2,750 in Taiwan Cooperative Financial on August 26, 2024 and sell it today you would lose (245.00) from holding Taiwan Cooperative Financial or give up 8.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Cooperative Financial vs. U Media Communications
Performance |
| Timeline |
| Taiwan Cooperative |
| U Media Communications |
Taiwan Cooperative and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cooperative and U Media
The main advantage of trading using opposite Taiwan Cooperative and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cooperative position performs unexpectedly, U Media 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 U Media will offset losses from the drop in U Media's long position.| Taiwan Cooperative vs. First Financial Holding | Taiwan Cooperative vs. Hua Nan Financial | Taiwan Cooperative vs. Mega Financial Holding | Taiwan Cooperative vs. ESUN Financial Holding |
| U Media vs. Accton Technology Corp | U Media vs. Arcadyan Technology Corp | U Media vs. Advanced Ceramic X | U Media vs. Gemtek Technology 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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