Correlation Between Taiwan FamilyMart and Aero Win
Can any of the company-specific risk be diversified away by investing in both Taiwan FamilyMart and Aero Win 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 Aero Win 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 Aero Win Technology, you can compare the effects of market volatilities on Taiwan FamilyMart and Aero Win 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 Aero Win. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan FamilyMart and Aero Win.
Diversification Opportunities for Taiwan FamilyMart and Aero Win
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Aero is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan FamilyMart Co and Aero Win Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aero Win 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 Aero Win. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aero Win Technology has no effect on the direction of Taiwan FamilyMart i.e., Taiwan FamilyMart and Aero Win go up and down completely randomly.
Pair Corralation between Taiwan FamilyMart and Aero Win
Assuming the 90 days trading horizon Taiwan FamilyMart is expected to generate 13.98 times less return on investment than Aero Win. But when comparing it to its historical volatility, Taiwan FamilyMart Co is 3.8 times less risky than Aero Win. It trades about 0.01 of its potential returns per unit of risk. Aero Win Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,070 in Aero Win Technology on August 28, 2024 and sell it today you would earn a total of 835.00 from holding Aero Win Technology or generate 27.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan FamilyMart Co vs. Aero Win Technology
Performance |
| Timeline |
| Taiwan FamilyMart |
| Aero Win Technology |
Taiwan FamilyMart and Aero Win Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan FamilyMart and Aero Win
The main advantage of trading using opposite Taiwan FamilyMart and Aero Win positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan FamilyMart position performs unexpectedly, Aero Win 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 Aero Win will offset losses from the drop in Aero Win's long position.| Taiwan FamilyMart vs. President Chain Store | Taiwan FamilyMart vs. Uni President Enterprises Corp | Taiwan FamilyMart vs. Poya International Co | Taiwan FamilyMart vs. Hotai Motor Co |
| Aero Win vs. China Airlines | Aero Win vs. Formosa Plastics Corp | Aero Win vs. Ruentex Development Co | Aero Win vs. Symtek Automation Asia |
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 Stocks Directory module to find actively traded stocks across global markets.
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