Correlation Between Merida Industry and Tainan Spinning
Can any of the company-specific risk be diversified away by investing in both Merida Industry and Tainan Spinning 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 Merida Industry and Tainan Spinning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merida Industry Co and Tainan Spinning Co, you can compare the effects of market volatilities on Merida Industry and Tainan Spinning 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 Merida Industry with a short position of Tainan Spinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merida Industry and Tainan Spinning.
Diversification Opportunities for Merida Industry and Tainan Spinning
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merida and Tainan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and Tainan Spinning Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Spinning and Merida Industry 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 Merida Industry Co are associated (or correlated) with Tainan Spinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Spinning has no effect on the direction of Merida Industry i.e., Merida Industry and Tainan Spinning go up and down completely randomly.
Pair Corralation between Merida Industry and Tainan Spinning
Assuming the 90 days trading horizon Merida Industry Co is expected to under-perform the Tainan Spinning. In addition to that, Merida Industry is 1.55 times more volatile than Tainan Spinning Co. It trades about -0.11 of its total potential returns per unit of risk. Tainan Spinning Co is currently generating about -0.09 per unit of volatility. If you would invest 1,855 in Tainan Spinning Co on September 5, 2024 and sell it today you would lose (325.00) from holding Tainan Spinning Co or give up 17.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merida Industry Co vs. Tainan Spinning Co
Performance |
| Timeline |
| Merida Industry |
| Tainan Spinning |
Merida Industry and Tainan Spinning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merida Industry and Tainan Spinning
The main advantage of trading using opposite Merida Industry and Tainan Spinning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merida Industry position performs unexpectedly, Tainan Spinning 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 Tainan Spinning will offset losses from the drop in Tainan Spinning's long position.| Merida Industry vs. Tainan Spinning Co | Merida Industry vs. Chia Her Industrial | Merida Industry vs. WiseChip Semiconductor | Merida Industry vs. Novatek Microelectronics Corp |
| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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