Correlation Between Great Taipei and Chainqui Construction
Can any of the company-specific risk be diversified away by investing in both Great Taipei and Chainqui Construction 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 Great Taipei and Chainqui Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Taipei Gas and Chainqui Construction Development, you can compare the effects of market volatilities on Great Taipei and Chainqui Construction 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 Great Taipei with a short position of Chainqui Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Taipei and Chainqui Construction.
Diversification Opportunities for Great Taipei and Chainqui Construction
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and Chainqui is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Great Taipei Gas and Chainqui Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainqui Construction and Great Taipei 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 Great Taipei Gas are associated (or correlated) with Chainqui Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chainqui Construction has no effect on the direction of Great Taipei i.e., Great Taipei and Chainqui Construction go up and down completely randomly.
Pair Corralation between Great Taipei and Chainqui Construction
Assuming the 90 days trading horizon Great Taipei Gas is expected to generate 0.12 times more return on investment than Chainqui Construction. However, Great Taipei Gas is 8.42 times less risky than Chainqui Construction. It trades about 0.22 of its potential returns per unit of risk. Chainqui Construction Development is currently generating about -0.13 per unit of risk. If you would invest 3,005 in Great Taipei Gas on August 30, 2024 and sell it today you would earn a total of 35.00 from holding Great Taipei Gas or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Taipei Gas vs. Chainqui Construction Developm
Performance |
| Timeline |
| Great Taipei Gas |
| Chainqui Construction |
Great Taipei and Chainqui Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Taipei and Chainqui Construction
The main advantage of trading using opposite Great Taipei and Chainqui Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Taipei position performs unexpectedly, Chainqui Construction 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 Chainqui Construction will offset losses from the drop in Chainqui Construction's long position.| Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Taiwan Cogeneration Corp | Great Taipei vs. Shin Hai Gas |
| Chainqui Construction vs. Yulon Motor Co | Chainqui Construction vs. Far Eastern Department | Chainqui Construction vs. China Steel Corp | Chainqui Construction vs. Chang Hwa Commercial |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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