Correlation Between Grand Ocean and Taiwan Cooperative
Can any of the company-specific risk be diversified away by investing in both Grand Ocean and Taiwan Cooperative 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 Grand Ocean and Taiwan Cooperative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Ocean Retail and Taiwan Cooperative Financial, you can compare the effects of market volatilities on Grand Ocean and Taiwan Cooperative 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 Grand Ocean with a short position of Taiwan Cooperative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Ocean and Taiwan Cooperative.
Diversification Opportunities for Grand Ocean and Taiwan Cooperative
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grand and Taiwan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and Taiwan Cooperative Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cooperative and Grand Ocean 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 Grand Ocean Retail are associated (or correlated) with Taiwan Cooperative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cooperative has no effect on the direction of Grand Ocean i.e., Grand Ocean and Taiwan Cooperative go up and down completely randomly.
Pair Corralation between Grand Ocean and Taiwan Cooperative
Assuming the 90 days trading horizon Grand Ocean Retail is expected to under-perform the Taiwan Cooperative. In addition to that, Grand Ocean is 2.73 times more volatile than Taiwan Cooperative Financial. It trades about -0.03 of its total potential returns per unit of risk. Taiwan Cooperative Financial is currently generating about 0.0 per unit of volatility. If you would invest 2,508 in Taiwan Cooperative Financial on November 28, 2024 and sell it today you would lose (73.00) from holding Taiwan Cooperative Financial or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Ocean Retail vs. Taiwan Cooperative Financial
Performance |
| Timeline |
| Grand Ocean Retail |
| Taiwan Cooperative |
Grand Ocean and Taiwan Cooperative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Ocean and Taiwan Cooperative
The main advantage of trading using opposite Grand Ocean and Taiwan Cooperative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Ocean position performs unexpectedly, Taiwan Cooperative 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 Taiwan Cooperative will offset losses from the drop in Taiwan Cooperative's long position.| Grand Ocean vs. First Steamship Co | Grand Ocean vs. Far Eastern Department | Grand Ocean vs. LongDa Construction Development | Grand Ocean vs. Collins Co |
| Taiwan Cooperative vs. First Financial Holding | Taiwan Cooperative vs. Hua Nan Financial | Taiwan Cooperative vs. Mega Financial Holding | Taiwan Cooperative vs. ESUN Financial Holding |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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