Correlation Between Taiwan FamilyMart and Eclat Textile
Can any of the company-specific risk be diversified away by investing in both Taiwan FamilyMart and Eclat Textile 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 FamilyMart and Eclat Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan FamilyMart Co and Eclat Textile Co, you can compare the effects of market volatilities on Taiwan FamilyMart and Eclat Textile 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 FamilyMart with a short position of Eclat Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan FamilyMart and Eclat Textile.
Diversification Opportunities for Taiwan FamilyMart and Eclat Textile
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Eclat is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan FamilyMart Co and Eclat Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclat Textile and Taiwan FamilyMart 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 FamilyMart Co are associated (or correlated) with Eclat Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclat Textile has no effect on the direction of Taiwan FamilyMart i.e., Taiwan FamilyMart and Eclat Textile go up and down completely randomly.
Pair Corralation between Taiwan FamilyMart and Eclat Textile
Assuming the 90 days trading horizon Taiwan FamilyMart Co is expected to generate 0.31 times more return on investment than Eclat Textile. However, Taiwan FamilyMart Co is 3.24 times less risky than Eclat Textile. It trades about 0.1 of its potential returns per unit of risk. Eclat Textile Co is currently generating about 0.01 per unit of risk. If you would invest 18,750 in Taiwan FamilyMart Co on September 3, 2024 and sell it today you would earn a total of 250.00 from holding Taiwan FamilyMart Co or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan FamilyMart Co vs. Eclat Textile Co
Performance |
| Timeline |
| Taiwan FamilyMart |
| Eclat Textile |
Taiwan FamilyMart and Eclat Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan FamilyMart and Eclat Textile
The main advantage of trading using opposite Taiwan FamilyMart and Eclat Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan FamilyMart position performs unexpectedly, Eclat Textile 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 Eclat Textile will offset losses from the drop in Eclat Textile's long position.| Taiwan FamilyMart vs. Standard Foods Corp | Taiwan FamilyMart vs. TTET Union Corp | Taiwan FamilyMart vs. Uni President Enterprises Corp | Taiwan FamilyMart vs. Charoen Pokphand Enterprise |
| Eclat Textile vs. Makalot Industrial Co | Eclat Textile vs. Feng Tay Enterprises | Eclat Textile vs. President Chain Store | Eclat Textile vs. Uni President Enterprises Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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