Correlation Between TMP Steel and Taishin Financial
Can any of the company-specific risk be diversified away by investing in both TMP Steel and Taishin Financial 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 TMP Steel and Taishin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMP Steel and Taishin Financial Holding, you can compare the effects of market volatilities on TMP Steel and Taishin Financial 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 TMP Steel with a short position of Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMP Steel and Taishin Financial.
Diversification Opportunities for TMP Steel and Taishin Financial
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TMP and Taishin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TMP Steel and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding and TMP Steel 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 TMP Steel are associated (or correlated) with Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of TMP Steel i.e., TMP Steel and Taishin Financial go up and down completely randomly.
Pair Corralation between TMP Steel and Taishin Financial
Assuming the 90 days trading horizon TMP Steel is expected to under-perform the Taishin Financial. In addition to that, TMP Steel is 6.32 times more volatile than Taishin Financial Holding. It trades about -0.15 of its total potential returns per unit of risk. Taishin Financial Holding is currently generating about -0.04 per unit of volatility. If you would invest 5,110 in Taishin Financial Holding on August 25, 2024 and sell it today you would lose (10.00) from holding Taishin Financial Holding or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMP Steel vs. Taishin Financial Holding
Performance |
| Timeline |
| TMP Steel |
| Taishin Financial Holding |
TMP Steel and Taishin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMP Steel and Taishin Financial
The main advantage of trading using opposite TMP Steel and Taishin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMP Steel position performs unexpectedly, Taishin Financial 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 Taishin Financial will offset losses from the drop in Taishin Financial's long position.| TMP Steel vs. China Steel Corp | TMP Steel vs. Chung Hung Steel | TMP Steel vs. Tung Ho Steel | TMP Steel vs. Feng Hsin Steel |
| Taishin Financial vs. Mega Financial Holding | Taishin Financial vs. Taiwan Cooperative Financial | Taishin Financial vs. ESUN Financial Holding | Taishin Financial vs. Hua Nan Financial |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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