Correlation Between Pontex Polyblend and Taiwan Cement
Can any of the company-specific risk be diversified away by investing in both Pontex Polyblend and Taiwan Cement 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 Pontex Polyblend and Taiwan Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pontex Polyblend CoLtd and Taiwan Cement Corp, you can compare the effects of market volatilities on Pontex Polyblend and Taiwan Cement 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 Pontex Polyblend with a short position of Taiwan Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pontex Polyblend and Taiwan Cement.
Diversification Opportunities for Pontex Polyblend and Taiwan Cement
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pontex and Taiwan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pontex Polyblend CoLtd and Taiwan Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cement Corp and Pontex Polyblend 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 Pontex Polyblend CoLtd are associated (or correlated) with Taiwan Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cement Corp has no effect on the direction of Pontex Polyblend i.e., Pontex Polyblend and Taiwan Cement go up and down completely randomly.
Pair Corralation between Pontex Polyblend and Taiwan Cement
Assuming the 90 days trading horizon Pontex Polyblend CoLtd is expected to generate 15.75 times more return on investment than Taiwan Cement. However, Pontex Polyblend is 15.75 times more volatile than Taiwan Cement Corp. It trades about 0.12 of its potential returns per unit of risk. Taiwan Cement Corp is currently generating about 0.06 per unit of risk. If you would invest 1,405 in Pontex Polyblend CoLtd on November 28, 2024 and sell it today you would earn a total of 1,045 from holding Pontex Polyblend CoLtd or generate 74.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pontex Polyblend CoLtd vs. Taiwan Cement Corp
Performance |
| Timeline |
| Pontex Polyblend CoLtd |
| Taiwan Cement Corp |
Pontex Polyblend and Taiwan Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pontex Polyblend and Taiwan Cement
The main advantage of trading using opposite Pontex Polyblend and Taiwan Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pontex Polyblend position performs unexpectedly, Taiwan Cement 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 Cement will offset losses from the drop in Taiwan Cement's long position.| Pontex Polyblend vs. Cheng Shin Rubber | Pontex Polyblend vs. Nankang Rubber Tire | Pontex Polyblend vs. USI Corp | Pontex Polyblend vs. Asia Polymer Corp |
| Taiwan Cement vs. Farglory Life Insurance | Taiwan Cement vs. Yuanta Financial Holdings | Taiwan Cement vs. Mercuries Life Insurance | Taiwan Cement vs. Tehmag Foods |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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