Correlation Between Taiwan Taomee and Tai Tung
Can any of the company-specific risk be diversified away by investing in both Taiwan Taomee and Tai Tung 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 Tai Tung 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 Tai Tung Communication, you can compare the effects of market volatilities on Taiwan Taomee and Tai Tung 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 Tai Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Taomee and Tai Tung.
Diversification Opportunities for Taiwan Taomee and Tai Tung
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Taiwan and Tai is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Taomee Co and Tai Tung Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tai Tung Communication 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 Tai Tung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tai Tung Communication has no effect on the direction of Taiwan Taomee i.e., Taiwan Taomee and Tai Tung go up and down completely randomly.
Pair Corralation between Taiwan Taomee and Tai Tung
Assuming the 90 days trading horizon Taiwan Taomee Co is expected to generate 1.52 times more return on investment than Tai Tung. However, Taiwan Taomee is 1.52 times more volatile than Tai Tung Communication. It trades about 0.18 of its potential returns per unit of risk. Tai Tung Communication is currently generating about 0.26 per unit of risk. If you would invest 1,000.00 in Taiwan Taomee Co on November 27, 2024 and sell it today you would earn a total of 50.00 from holding Taiwan Taomee Co or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Taomee Co vs. Tai Tung Communication
Performance |
| Timeline |
| Taiwan Taomee |
| Tai Tung Communication |
Taiwan Taomee and Tai Tung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Taomee and Tai Tung
The main advantage of trading using opposite Taiwan Taomee and Tai Tung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Taomee position performs unexpectedly, Tai Tung 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 Tai Tung will offset losses from the drop in Tai Tung's long position.| Taiwan Taomee vs. Information Technology Total | Taiwan Taomee vs. Transcend Information | Taiwan Taomee vs. Tung Ho Steel | Taiwan Taomee vs. Sheng Yu Steel |
| Tai Tung vs. Sunplus Technology Co | Tai Tung vs. Silicon Integrated Systems | Tai Tung vs. Realtek Semiconductor Corp | Tai Tung vs. Elan Microelectronics Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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