Correlation Between Tai Tung and IBF Financial
Can any of the company-specific risk be diversified away by investing in both Tai Tung and IBF Financial 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 IBF Financial 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 IBF Financial Holdings, you can compare the effects of market volatilities on Tai Tung and IBF Financial 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 IBF Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tai Tung and IBF Financial.
Diversification Opportunities for Tai Tung and IBF Financial
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tai and IBF is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tai Tung Communication and IBF Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBF Financial Holdings 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 IBF Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBF Financial Holdings has no effect on the direction of Tai Tung i.e., Tai Tung and IBF Financial go up and down completely randomly.
Pair Corralation between Tai Tung and IBF Financial
Assuming the 90 days trading horizon Tai Tung Communication is expected to generate 2.32 times more return on investment than IBF Financial. However, Tai Tung is 2.32 times more volatile than IBF Financial Holdings. It trades about 0.06 of its potential returns per unit of risk. IBF Financial Holdings is currently generating about 0.05 per unit of risk. If you would invest 1,470 in Tai Tung Communication on September 3, 2024 and sell it today you would earn a total of 1,180 from holding Tai Tung Communication or generate 80.27% 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. IBF Financial Holdings
Performance |
| Timeline |
| Tai Tung Communication |
| IBF Financial Holdings |
Tai Tung and IBF Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tai Tung and IBF Financial
The main advantage of trading using opposite Tai Tung and IBF Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tai Tung position performs unexpectedly, IBF Financial 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 IBF Financial will offset losses from the drop in IBF Financial's long position.| Tai Tung vs. Taiwan Semiconductor Manufacturing | Tai Tung vs. Yang Ming Marine | Tai Tung vs. ASE Industrial Holding | Tai Tung vs. AU Optronics |
| IBF Financial vs. Central Reinsurance Corp | IBF Financial vs. Huaku Development Co | IBF Financial vs. Chailease Holding Co | IBF Financial vs. CTBC Financial Holding |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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