Correlation Between Taiwan Steel and WinMate Communication
Can any of the company-specific risk be diversified away by investing in both Taiwan Steel and WinMate Communication 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 WinMate Communication 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 WinMate Communication INC, you can compare the effects of market volatilities on Taiwan Steel and WinMate Communication 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 WinMate Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Steel and WinMate Communication.
Diversification Opportunities for Taiwan Steel and WinMate Communication
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and WinMate is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Steel Union and WinMate Communication INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WinMate Communication INC 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 WinMate Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WinMate Communication INC has no effect on the direction of Taiwan Steel i.e., Taiwan Steel and WinMate Communication go up and down completely randomly.
Pair Corralation between Taiwan Steel and WinMate Communication
Assuming the 90 days trading horizon Taiwan Steel is expected to generate 1.36 times less return on investment than WinMate Communication. But when comparing it to its historical volatility, Taiwan Steel Union is 1.47 times less risky than WinMate Communication. It trades about 0.06 of its potential returns per unit of risk. WinMate Communication INC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11,100 in WinMate Communication INC on September 2, 2024 and sell it today you would earn a total of 4,050 from holding WinMate Communication INC or generate 36.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Steel Union vs. WinMate Communication INC
Performance |
| Timeline |
| Taiwan Steel Union |
| WinMate Communication INC |
Taiwan Steel and WinMate Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Steel and WinMate Communication
The main advantage of trading using opposite Taiwan Steel and WinMate Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Steel position performs unexpectedly, WinMate Communication 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 WinMate Communication will offset losses from the drop in WinMate Communication's long position.| Taiwan Steel vs. Cleanaway Co | Taiwan Steel vs. Taiwan Secom Co | Taiwan Steel vs. TTET Union Corp | Taiwan Steel vs. Tehmag Foods |
| WinMate Communication vs. Hon Hai Precision | WinMate Communication vs. Delta Electronics | WinMate Communication vs. LARGAN Precision Co | WinMate Communication vs. Yageo 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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