Correlation Between Taiwan Hopax and Double Bond
Can any of the company-specific risk be diversified away by investing in both Taiwan Hopax and Double Bond 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 Hopax and Double Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Hopax Chemsistry and Double Bond Chemical, you can compare the effects of market volatilities on Taiwan Hopax and Double Bond 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 Hopax with a short position of Double Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Hopax and Double Bond.
Diversification Opportunities for Taiwan Hopax and Double Bond
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Double is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Hopax Chemsistry and Double Bond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Double Bond Chemical and Taiwan Hopax 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 Hopax Chemsistry are associated (or correlated) with Double Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Double Bond Chemical has no effect on the direction of Taiwan Hopax i.e., Taiwan Hopax and Double Bond go up and down completely randomly.
Pair Corralation between Taiwan Hopax and Double Bond
Assuming the 90 days trading horizon Taiwan Hopax Chemsistry is expected to generate 1.0 times more return on investment than Double Bond. However, Taiwan Hopax Chemsistry is 1.0 times less risky than Double Bond. It trades about 0.0 of its potential returns per unit of risk. Double Bond Chemical is currently generating about -0.01 per unit of risk. If you would invest 4,049 in Taiwan Hopax Chemsistry on October 27, 2024 and sell it today you would lose (304.00) from holding Taiwan Hopax Chemsistry or give up 7.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan Hopax Chemsistry vs. Double Bond Chemical
Performance |
| Timeline |
| Taiwan Hopax Chemsistry |
| Double Bond Chemical |
Taiwan Hopax and Double Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Hopax and Double Bond
The main advantage of trading using opposite Taiwan Hopax and Double Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Hopax position performs unexpectedly, Double Bond 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 Double Bond will offset losses from the drop in Double Bond's long position.| Taiwan Hopax vs. Mechema Chemicals Int | Taiwan Hopax vs. Coremax Corp | Taiwan Hopax vs. China Steel Chemical | Taiwan Hopax vs. Wafer Works |
| Double Bond vs. Nan Ya Plastics | Double Bond vs. China Petrochemical Development | Double Bond vs. Eternal Materials Co | Double Bond vs. TSRC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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