Correlation Between Momo and Taiwan FamilyMart
Can any of the company-specific risk be diversified away by investing in both Momo and Taiwan FamilyMart 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 Momo and Taiwan FamilyMart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between momo Inc and Taiwan FamilyMart Co, you can compare the effects of market volatilities on Momo and Taiwan FamilyMart 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 Momo with a short position of Taiwan FamilyMart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momo and Taiwan FamilyMart.
Diversification Opportunities for Momo and Taiwan FamilyMart
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Momo and Taiwan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding momo Inc and Taiwan FamilyMart Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan FamilyMart and Momo 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 momo Inc are associated (or correlated) with Taiwan FamilyMart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan FamilyMart has no effect on the direction of Momo i.e., Momo and Taiwan FamilyMart go up and down completely randomly.
Pair Corralation between Momo and Taiwan FamilyMart
Assuming the 90 days trading horizon momo Inc is expected to under-perform the Taiwan FamilyMart. In addition to that, Momo is 2.55 times more volatile than Taiwan FamilyMart Co. It trades about -0.03 of its total potential returns per unit of risk. Taiwan FamilyMart Co is currently generating about 0.02 per unit of volatility. If you would invest 17,864 in Taiwan FamilyMart Co on September 3, 2024 and sell it today you would earn a total of 1,136 from holding Taiwan FamilyMart Co or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
momo Inc vs. Taiwan FamilyMart Co
Performance |
| Timeline |
| momo Inc |
| Taiwan FamilyMart |
Momo and Taiwan FamilyMart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momo and Taiwan FamilyMart
The main advantage of trading using opposite Momo and Taiwan FamilyMart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momo position performs unexpectedly, Taiwan FamilyMart 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 FamilyMart will offset losses from the drop in Taiwan FamilyMart's long position.The idea behind momo Inc and Taiwan FamilyMart Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Taiwan FamilyMart vs. Standard Foods Corp | Taiwan FamilyMart vs. TTET Union Corp | Taiwan FamilyMart vs. Uni President Enterprises Corp | Taiwan FamilyMart vs. Charoen Pokphand Enterprise |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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