Correlation Between Tai Tung and Far EasTone
Can any of the company-specific risk be diversified away by investing in both Tai Tung and Far EasTone 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 Far EasTone 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 Far EasTone Telecommunications, you can compare the effects of market volatilities on Tai Tung and Far EasTone 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 Far EasTone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tai Tung and Far EasTone.
Diversification Opportunities for Tai Tung and Far EasTone
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tai and Far is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tai Tung Communication and Far EasTone Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far EasTone Telecomm 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 Far EasTone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far EasTone Telecomm has no effect on the direction of Tai Tung i.e., Tai Tung and Far EasTone go up and down completely randomly.
Pair Corralation between Tai Tung and Far EasTone
Assuming the 90 days trading horizon Tai Tung Communication is expected to generate 1.52 times more return on investment than Far EasTone. However, Tai Tung is 1.52 times more volatile than Far EasTone Telecommunications. It trades about 0.23 of its potential returns per unit of risk. Far EasTone Telecommunications is currently generating about 0.02 per unit of risk. If you would invest 2,250 in Tai Tung Communication on November 29, 2024 and sell it today you would earn a total of 110.00 from holding Tai Tung Communication or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tai Tung Communication vs. Far EasTone Telecommunications
Performance |
| Timeline |
| Tai Tung Communication |
| Far EasTone Telecomm |
Tai Tung and Far EasTone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tai Tung and Far EasTone
The main advantage of trading using opposite Tai Tung and Far EasTone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tai Tung position performs unexpectedly, Far EasTone 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 Far EasTone will offset losses from the drop in Far EasTone's long position.| Tai Tung vs. Zinwell | Tai Tung vs. Mercuries Life Insurance | Tai Tung vs. Darwin Precisions Corp | Tai Tung vs. Jinli Group Holdings |
| Far EasTone vs. Taiwan Mobile Co | Far EasTone vs. Chunghwa Telecom Co | Far EasTone vs. President Chain Store | Far EasTone vs. Formosa Petrochemical 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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