Correlation Between Taiwan Taomee and Chi Sheng
Can any of the company-specific risk be diversified away by investing in both Taiwan Taomee and Chi Sheng 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 Taomee and Chi Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Taomee Co and Chi Sheng Chemical, you can compare the effects of market volatilities on Taiwan Taomee and Chi Sheng 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 Taomee with a short position of Chi Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Taomee and Chi Sheng.
Diversification Opportunities for Taiwan Taomee and Chi Sheng
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Chi is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Taomee Co and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical and Taiwan Taomee 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 Taomee Co are associated (or correlated) with Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of Taiwan Taomee i.e., Taiwan Taomee and Chi Sheng go up and down completely randomly.
Pair Corralation between Taiwan Taomee and Chi Sheng
Assuming the 90 days trading horizon Taiwan Taomee Co is expected to generate 1.67 times more return on investment than Chi Sheng. However, Taiwan Taomee is 1.67 times more volatile than Chi Sheng Chemical. It trades about 0.01 of its potential returns per unit of risk. Chi Sheng Chemical is currently generating about 0.01 per unit of risk. If you would invest 1,180 in Taiwan Taomee Co on September 3, 2024 and sell it today you would lose (115.00) from holding Taiwan Taomee Co or give up 9.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Taomee Co vs. Chi Sheng Chemical
Performance |
| Timeline |
| Taiwan Taomee |
| Chi Sheng Chemical |
Taiwan Taomee and Chi Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Taomee and Chi Sheng
The main advantage of trading using opposite Taiwan Taomee and Chi Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Taomee position performs unexpectedly, Chi Sheng 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 Chi Sheng will offset losses from the drop in Chi Sheng's long position.| Taiwan Taomee vs. U Media Communications | Taiwan Taomee vs. Ma Kuang Healthcare | Taiwan Taomee vs. STARLUX Airlines Co | Taiwan Taomee vs. Cameo Communications |
| Chi Sheng vs. SciVision Biotech | Chi Sheng vs. WiseChip Semiconductor | Chi Sheng vs. Novatek Microelectronics Corp | Chi Sheng vs. Leader Electronics |
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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