Correlation Between Asia Metal and Taiwan Weighted
Can any of the company-specific risk be diversified away by investing in both Asia Metal and Taiwan Weighted 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 Asia Metal and Taiwan Weighted into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Metal Industries and Taiwan Weighted, you can compare the effects of market volatilities on Asia Metal and Taiwan Weighted 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 Asia Metal with a short position of Taiwan Weighted. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and Taiwan Weighted.
Diversification Opportunities for Asia Metal and Taiwan Weighted
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asia and Taiwan is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Industries and Taiwan Weighted in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Weighted and Asia Metal 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 Asia Metal Industries are associated (or correlated) with Taiwan Weighted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Weighted has no effect on the direction of Asia Metal i.e., Asia Metal and Taiwan Weighted go up and down completely randomly.
Pair Corralation between Asia Metal and Taiwan Weighted
Assuming the 90 days trading horizon Asia Metal Industries is expected to generate 1.6 times more return on investment than Taiwan Weighted. However, Asia Metal is 1.6 times more volatile than Taiwan Weighted. It trades about 0.07 of its potential returns per unit of risk. Taiwan Weighted is currently generating about 0.1 per unit of risk. If you would invest 5,840 in Asia Metal Industries on September 14, 2024 and sell it today you would earn a total of 2,370 from holding Asia Metal Industries or generate 40.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.48% |
| Values | Daily Returns |
Asia Metal Industries vs. Taiwan Weighted
Performance |
| Timeline |
Asia Metal and Taiwan Weighted Volatility Contrast
Predicted Return Density |
| Returns |
Asia Metal Industries
Pair trading matchups for Asia Metal
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Pair Trading with Asia Metal and Taiwan Weighted
The main advantage of trading using opposite Asia Metal and Taiwan Weighted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Metal position performs unexpectedly, Taiwan Weighted 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 Taiwan Weighted will offset losses from the drop in Taiwan Weighted's long position.| Asia Metal vs. Ruentex Development Co | Asia Metal vs. WiseChip Semiconductor | Asia Metal vs. Novatek Microelectronics Corp | Asia Metal vs. Leader Electronics |
| Taiwan Weighted vs. Asia Metal Industries | Taiwan Weighted vs. Chinese Gamer International | Taiwan Weighted vs. Great China Metal | Taiwan Weighted vs. GAME HOURS |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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