Correlation Between Tai Tung and Yageo Corp
Can any of the company-specific risk be diversified away by investing in both Tai Tung and Yageo Corp 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 Tai Tung and Yageo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tai Tung Communication and Yageo Corp, you can compare the effects of market volatilities on Tai Tung and Yageo Corp 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 Tai Tung with a short position of Yageo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tai Tung and Yageo Corp.
Diversification Opportunities for Tai Tung and Yageo Corp
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tai and Yageo is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tai Tung Communication and Yageo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yageo Corp and Tai Tung 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 Tai Tung Communication are associated (or correlated) with Yageo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yageo Corp has no effect on the direction of Tai Tung i.e., Tai Tung and Yageo Corp go up and down completely randomly.
Pair Corralation between Tai Tung and Yageo Corp
Assuming the 90 days trading horizon Tai Tung Communication is expected to generate 1.52 times more return on investment than Yageo Corp. However, Tai Tung is 1.52 times more volatile than Yageo Corp. It trades about 0.06 of its potential returns per unit of risk. Yageo Corp is currently generating about 0.02 per unit of risk. If you would invest 1,435 in Tai Tung Communication on September 14, 2024 and sell it today you would earn a total of 1,115 from holding Tai Tung Communication or generate 77.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tai Tung Communication vs. Yageo Corp
Performance |
| Timeline |
| Tai Tung Communication |
| Yageo Corp |
Tai Tung and Yageo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tai Tung and Yageo Corp
The main advantage of trading using opposite Tai Tung and Yageo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tai Tung position performs unexpectedly, Yageo Corp 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 Yageo Corp will offset losses from the drop in Yageo Corp's long position.| Tai Tung vs. AU Optronics | Tai Tung vs. Innolux Corp | Tai Tung vs. Ruentex Development Co | Tai Tung vs. WiseChip Semiconductor |
| Yageo Corp vs. ESUN Financial Holding | Yageo Corp vs. Wei Chuan Foods | Yageo Corp vs. Cathay Financial Holding | Yageo Corp vs. Tai Tung Communication |
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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