Correlation Between Advanced International and Taiwan Fu
Can any of the company-specific risk be diversified away by investing in both Advanced International and Taiwan Fu 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 Advanced International and Taiwan Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced International Multitech and Taiwan Fu Hsing, you can compare the effects of market volatilities on Advanced International and Taiwan Fu 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 Advanced International with a short position of Taiwan Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced International and Taiwan Fu.
Diversification Opportunities for Advanced International and Taiwan Fu
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advanced and Taiwan is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Advanced International Multite and Taiwan Fu Hsing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Fu Hsing and Advanced International 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 Advanced International Multitech are associated (or correlated) with Taiwan Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Fu Hsing has no effect on the direction of Advanced International i.e., Advanced International and Taiwan Fu go up and down completely randomly.
Pair Corralation between Advanced International and Taiwan Fu
Assuming the 90 days trading horizon Advanced International Multitech is expected to under-perform the Taiwan Fu. But the stock apears to be less risky and, when comparing its historical volatility, Advanced International Multitech is 4.92 times less risky than Taiwan Fu. The stock trades about -0.33 of its potential returns per unit of risk. The Taiwan Fu Hsing is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 5,700 in Taiwan Fu Hsing on August 25, 2024 and sell it today you would lose (320.00) from holding Taiwan Fu Hsing or give up 5.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced International Multite vs. Taiwan Fu Hsing
Performance |
| Timeline |
| Advanced International |
| Taiwan Fu Hsing |
Advanced International and Taiwan Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced International and Taiwan Fu
The main advantage of trading using opposite Advanced International and Taiwan Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced International position performs unexpectedly, Taiwan Fu 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 Fu will offset losses from the drop in Taiwan Fu's long position.| Advanced International vs. Giant Manufacturing Co | Advanced International vs. Johnson Health Tech | Advanced International vs. Sports Gear Co | Advanced International vs. Power Wind Health |
| Taiwan Fu vs. Taiwan Shin Kong | Taiwan Fu vs. Taiwan Secom Co | Taiwan Fu vs. Pou Chen Corp | Taiwan Fu vs. Taiwan Hon Chuan |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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