Correlation Between Taiwan Steel and STARLUX Airlines
Can any of the company-specific risk be diversified away by investing in both Taiwan Steel and STARLUX Airlines 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 Steel and STARLUX Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Steel Union and STARLUX Airlines Co, you can compare the effects of market volatilities on Taiwan Steel and STARLUX Airlines 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 Steel with a short position of STARLUX Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Steel and STARLUX Airlines.
Diversification Opportunities for Taiwan Steel and STARLUX Airlines
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and STARLUX is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Steel Union and STARLUX Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STARLUX Airlines and Taiwan 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 Taiwan Steel Union are associated (or correlated) with STARLUX Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STARLUX Airlines has no effect on the direction of Taiwan Steel i.e., Taiwan Steel and STARLUX Airlines go up and down completely randomly.
Pair Corralation between Taiwan Steel and STARLUX Airlines
Assuming the 90 days trading horizon Taiwan Steel Union is expected to under-perform the STARLUX Airlines. In addition to that, Taiwan Steel is 2.17 times more volatile than STARLUX Airlines Co. It trades about -0.29 of its total potential returns per unit of risk. STARLUX Airlines Co is currently generating about 0.15 per unit of volatility. If you would invest 2,780 in STARLUX Airlines Co on October 22, 2024 and sell it today you would earn a total of 10.00 from holding STARLUX Airlines Co or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 20.0% |
| Values | Daily Returns |
Taiwan Steel Union vs. STARLUX Airlines Co
Performance |
| Timeline |
| Taiwan Steel Union |
| STARLUX Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Taiwan Steel and STARLUX Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Steel and STARLUX Airlines
The main advantage of trading using opposite Taiwan Steel and STARLUX Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Steel position performs unexpectedly, STARLUX Airlines 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 STARLUX Airlines will offset losses from the drop in STARLUX Airlines' long position.| Taiwan Steel vs. Cleanaway Co | Taiwan Steel vs. Sunny Friend Environmental | Taiwan Steel vs. Topco Scientific Co | Taiwan Steel vs. Kung Long Batteries |
| STARLUX Airlines vs. Syntek Semiconductor Co | STARLUX Airlines vs. Delpha Construction Co | STARLUX Airlines vs. Healthconn Corp | STARLUX Airlines vs. Orient Semiconductor 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |