Correlation Between Taiwan FamilyMart and Addcn Technology
Can any of the company-specific risk be diversified away by investing in both Taiwan FamilyMart and Addcn Technology 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 Addcn Technology 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 Addcn Technology Co, you can compare the effects of market volatilities on Taiwan FamilyMart and Addcn Technology 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 Addcn Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan FamilyMart and Addcn Technology.
Diversification Opportunities for Taiwan FamilyMart and Addcn Technology
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Addcn is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan FamilyMart Co and Addcn Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addcn Technology 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 Addcn Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addcn Technology has no effect on the direction of Taiwan FamilyMart i.e., Taiwan FamilyMart and Addcn Technology go up and down completely randomly.
Pair Corralation between Taiwan FamilyMart and Addcn Technology
Assuming the 90 days trading horizon Taiwan FamilyMart is expected to generate 3.84 times less return on investment than Addcn Technology. But when comparing it to its historical volatility, Taiwan FamilyMart Co is 2.35 times less risky than Addcn Technology. It trades about 0.01 of its potential returns per unit of risk. Addcn Technology Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 18,009 in Addcn Technology Co on September 4, 2024 and sell it today you would earn a total of 391.00 from holding Addcn Technology Co or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan FamilyMart Co vs. Addcn Technology Co
Performance |
| Timeline |
| Taiwan FamilyMart |
| Addcn Technology |
Taiwan FamilyMart and Addcn Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan FamilyMart and Addcn Technology
The main advantage of trading using opposite Taiwan FamilyMart and Addcn Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan FamilyMart position performs unexpectedly, Addcn Technology 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 Addcn Technology will offset losses from the drop in Addcn Technology's long position.| Taiwan FamilyMart vs. Uni President Enterprises Corp | Taiwan FamilyMart vs. Charoen Pokphand Enterprise |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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