Correlation Between Taiwan Cogeneration and Taiwan Navigation
Can any of the company-specific risk be diversified away by investing in both Taiwan Cogeneration and Taiwan Navigation 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 Cogeneration and Taiwan Navigation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Cogeneration Corp and Taiwan Navigation Co, you can compare the effects of market volatilities on Taiwan Cogeneration and Taiwan Navigation 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 Cogeneration with a short position of Taiwan Navigation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cogeneration and Taiwan Navigation.
Diversification Opportunities for Taiwan Cogeneration and Taiwan Navigation
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Taiwan and Taiwan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cogeneration Corp and Taiwan Navigation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Navigation and Taiwan Cogeneration 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 Cogeneration Corp are associated (or correlated) with Taiwan Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Navigation has no effect on the direction of Taiwan Cogeneration i.e., Taiwan Cogeneration and Taiwan Navigation go up and down completely randomly.
Pair Corralation between Taiwan Cogeneration and Taiwan Navigation
Assuming the 90 days trading horizon Taiwan Cogeneration Corp is expected to under-perform the Taiwan Navigation. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Cogeneration Corp is 1.12 times less risky than Taiwan Navigation. The stock trades about -0.07 of its potential returns per unit of risk. The Taiwan Navigation Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,185 in Taiwan Navigation Co on September 2, 2024 and sell it today you would lose (80.00) from holding Taiwan Navigation Co or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Cogeneration Corp vs. Taiwan Navigation Co
Performance |
| Timeline |
| Taiwan Cogeneration Corp |
| Taiwan Navigation |
Taiwan Cogeneration and Taiwan Navigation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cogeneration and Taiwan Navigation
The main advantage of trading using opposite Taiwan Cogeneration and Taiwan Navigation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cogeneration position performs unexpectedly, Taiwan Navigation 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 Navigation will offset losses from the drop in Taiwan Navigation's long position.| Taiwan Cogeneration vs. Great Taipei Gas | Taiwan Cogeneration vs. Taiwan Cement Corp | Taiwan Cogeneration vs. Mega Financial Holding | Taiwan Cogeneration vs. First Financial Holding |
| Taiwan Navigation vs. BES Engineering Co | Taiwan Navigation vs. Continental Holdings Corp | Taiwan Navigation vs. Kee Tai Properties | Taiwan Navigation vs. Hung Sheng Construction |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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