Correlation Between Taiwan Chinsan and Ok Biotech
Can any of the company-specific risk be diversified away by investing in both Taiwan Chinsan and Ok Biotech 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 Chinsan and Ok Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Chinsan Electronic and Ok Biotech Co, you can compare the effects of market volatilities on Taiwan Chinsan and Ok Biotech 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 Chinsan with a short position of Ok Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Chinsan and Ok Biotech.
Diversification Opportunities for Taiwan Chinsan and Ok Biotech
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and 4155 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Chinsan Electronic and Ok Biotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ok Biotech and Taiwan Chinsan 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 Chinsan Electronic are associated (or correlated) with Ok Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ok Biotech has no effect on the direction of Taiwan Chinsan i.e., Taiwan Chinsan and Ok Biotech go up and down completely randomly.
Pair Corralation between Taiwan Chinsan and Ok Biotech
Assuming the 90 days trading horizon Taiwan Chinsan Electronic is expected to generate 3.27 times more return on investment than Ok Biotech. However, Taiwan Chinsan is 3.27 times more volatile than Ok Biotech Co. It trades about 0.38 of its potential returns per unit of risk. Ok Biotech Co is currently generating about -0.29 per unit of risk. If you would invest 3,480 in Taiwan Chinsan Electronic on September 5, 2024 and sell it today you would earn a total of 1,360 from holding Taiwan Chinsan Electronic or generate 39.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Taiwan Chinsan Electronic vs. Ok Biotech Co
Performance |
| Timeline |
| Taiwan Chinsan Electronic |
| Ok Biotech |
Taiwan Chinsan and Ok Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Chinsan and Ok Biotech
The main advantage of trading using opposite Taiwan Chinsan and Ok Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Chinsan position performs unexpectedly, Ok Biotech 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 Ok Biotech will offset losses from the drop in Ok Biotech's long position.| Taiwan Chinsan vs. U Media Communications | Taiwan Chinsan vs. Hsinli Chemical Industrial | Taiwan Chinsan vs. Unitech Computer Co | Taiwan Chinsan vs. Jinan Acetate Chemical |
| Ok Biotech vs. Solar Applied Materials | Ok Biotech vs. Daxin Materials Corp | Ok Biotech vs. Goldsun Building Materials | Ok Biotech vs. Taiwan Chinsan Electronic |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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