Correlation Between Deltamac Taiwan and Zeng Hsing
Can any of the company-specific risk be diversified away by investing in both Deltamac Taiwan and Zeng Hsing 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 Deltamac Taiwan and Zeng Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deltamac Taiwan Co and Zeng Hsing Industrial, you can compare the effects of market volatilities on Deltamac Taiwan and Zeng Hsing 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 Deltamac Taiwan with a short position of Zeng Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deltamac Taiwan and Zeng Hsing.
Diversification Opportunities for Deltamac Taiwan and Zeng Hsing
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deltamac and Zeng is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Deltamac Taiwan Co and Zeng Hsing Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeng Hsing Industrial and Deltamac Taiwan 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 Deltamac Taiwan Co are associated (or correlated) with Zeng Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeng Hsing Industrial has no effect on the direction of Deltamac Taiwan i.e., Deltamac Taiwan and Zeng Hsing go up and down completely randomly.
Pair Corralation between Deltamac Taiwan and Zeng Hsing
Assuming the 90 days trading horizon Deltamac Taiwan Co is expected to generate 5.06 times more return on investment than Zeng Hsing. However, Deltamac Taiwan is 5.06 times more volatile than Zeng Hsing Industrial. It trades about 0.11 of its potential returns per unit of risk. Zeng Hsing Industrial is currently generating about 0.02 per unit of risk. If you would invest 2,535 in Deltamac Taiwan Co on September 1, 2024 and sell it today you would earn a total of 2,075 from holding Deltamac Taiwan Co or generate 81.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deltamac Taiwan Co vs. Zeng Hsing Industrial
Performance |
| Timeline |
| Deltamac Taiwan |
| Zeng Hsing Industrial |
Deltamac Taiwan and Zeng Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deltamac Taiwan and Zeng Hsing
The main advantage of trading using opposite Deltamac Taiwan and Zeng Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deltamac Taiwan position performs unexpectedly, Zeng Hsing 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 Zeng Hsing will offset losses from the drop in Zeng Hsing's long position.| Deltamac Taiwan vs. Sinopac Financial Holdings | Deltamac Taiwan vs. Pontex Polyblend CoLtd | Deltamac Taiwan vs. Taiwan Cooperative Financial | Deltamac Taiwan vs. Farglory FTZ Investment |
| Zeng Hsing vs. TTET Union Corp | Zeng Hsing vs. Shinkong Insurance Co | Zeng Hsing vs. Huaku Development Co | Zeng Hsing vs. China Steel Chemical |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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