Correlation Between Taiwan Steel and Shinkong Insurance
Can any of the company-specific risk be diversified away by investing in both Taiwan Steel and Shinkong Insurance 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 Shinkong Insurance 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 Shinkong Insurance Co, you can compare the effects of market volatilities on Taiwan Steel and Shinkong Insurance 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 Shinkong Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Steel and Shinkong Insurance.
Diversification Opportunities for Taiwan Steel and Shinkong Insurance
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and Shinkong is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Steel Union and Shinkong Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Insurance 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 Shinkong Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Insurance has no effect on the direction of Taiwan Steel i.e., Taiwan Steel and Shinkong Insurance go up and down completely randomly.
Pair Corralation between Taiwan Steel and Shinkong Insurance
Assuming the 90 days trading horizon Taiwan Steel Union is expected to generate 1.13 times more return on investment than Shinkong Insurance. However, Taiwan Steel is 1.13 times more volatile than Shinkong Insurance Co. It trades about 0.47 of its potential returns per unit of risk. Shinkong Insurance Co is currently generating about -0.11 per unit of risk. If you would invest 10,450 in Taiwan Steel Union on November 28, 2024 and sell it today you would earn a total of 1,000.00 from holding Taiwan Steel Union or generate 9.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Steel Union vs. Shinkong Insurance Co
Performance |
| Timeline |
| Taiwan Steel Union |
| Shinkong Insurance |
Taiwan Steel and Shinkong Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Steel and Shinkong Insurance
The main advantage of trading using opposite Taiwan Steel and Shinkong Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Steel position performs unexpectedly, Shinkong Insurance 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 Shinkong Insurance will offset losses from the drop in Shinkong Insurance's 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 |
| Shinkong Insurance vs. Central Reinsurance Corp | Shinkong Insurance vs. Huaku Development Co | Shinkong Insurance vs. Fubon Financial Holding | Shinkong Insurance vs. Chailease Holding Co |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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