Correlation Between Taiwan Sakura and Golden Friends
Can any of the company-specific risk be diversified away by investing in both Taiwan Sakura and Golden Friends 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 Sakura and Golden Friends into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Sakura Corp and Golden Friends, you can compare the effects of market volatilities on Taiwan Sakura and Golden Friends 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 Sakura with a short position of Golden Friends. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Sakura and Golden Friends.
Diversification Opportunities for Taiwan Sakura and Golden Friends
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taiwan and Golden is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Sakura Corp and Golden Friends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Friends and Taiwan Sakura 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 Sakura Corp are associated (or correlated) with Golden Friends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Friends has no effect on the direction of Taiwan Sakura i.e., Taiwan Sakura and Golden Friends go up and down completely randomly.
Pair Corralation between Taiwan Sakura and Golden Friends
Assuming the 90 days trading horizon Taiwan Sakura Corp is expected to generate 1.18 times more return on investment than Golden Friends. However, Taiwan Sakura is 1.18 times more volatile than Golden Friends. It trades about 0.09 of its potential returns per unit of risk. Golden Friends is currently generating about 0.03 per unit of risk. If you would invest 8,290 in Taiwan Sakura Corp on September 1, 2024 and sell it today you would earn a total of 170.00 from holding Taiwan Sakura Corp or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Sakura Corp vs. Golden Friends
Performance |
| Timeline |
| Taiwan Sakura Corp |
| Golden Friends |
Taiwan Sakura and Golden Friends Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Sakura and Golden Friends
The main advantage of trading using opposite Taiwan Sakura and Golden Friends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Sakura position performs unexpectedly, Golden Friends 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 Golden Friends will offset losses from the drop in Golden Friends' long position.| Taiwan Sakura vs. Chaintech Technology Corp | Taiwan Sakura vs. AVerMedia Technologies | Taiwan Sakura vs. Avision | Taiwan Sakura vs. Clevo Co |
| Golden Friends vs. Sunonwealth Electric Machine | Golden Friends vs. Rechi Precision Co | Golden Friends vs. Fittech Co | Golden Friends vs. C Sun Manufacturing |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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