Correlation Between Taiwan Secom and Hung Chou
Can any of the company-specific risk be diversified away by investing in both Taiwan Secom and Hung Chou 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 Secom and Hung Chou into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Secom Co and Hung Chou Fiber, you can compare the effects of market volatilities on Taiwan Secom and Hung Chou 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 Secom with a short position of Hung Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Secom and Hung Chou.
Diversification Opportunities for Taiwan Secom and Hung Chou
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Hung is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Secom Co and Hung Chou Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Chou Fiber and Taiwan Secom 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 Secom Co are associated (or correlated) with Hung Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Chou Fiber has no effect on the direction of Taiwan Secom i.e., Taiwan Secom and Hung Chou go up and down completely randomly.
Pair Corralation between Taiwan Secom and Hung Chou
Assuming the 90 days trading horizon Taiwan Secom Co is expected to under-perform the Hung Chou. In addition to that, Taiwan Secom is 1.37 times more volatile than Hung Chou Fiber. It trades about -0.1 of its total potential returns per unit of risk. Hung Chou Fiber is currently generating about 0.4 per unit of volatility. If you would invest 966.00 in Hung Chou Fiber on August 30, 2024 and sell it today you would earn a total of 119.00 from holding Hung Chou Fiber or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Secom Co vs. Hung Chou Fiber
Performance |
| Timeline |
| Taiwan Secom |
| Hung Chou Fiber |
Taiwan Secom and Hung Chou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Secom and Hung Chou
The main advantage of trading using opposite Taiwan Secom and Hung Chou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Secom position performs unexpectedly, Hung Chou 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 Hung Chou will offset losses from the drop in Hung Chou's long position.| Taiwan Secom vs. Yulon Motor Co | Taiwan Secom vs. Far Eastern Department | Taiwan Secom vs. China Steel Corp | Taiwan Secom 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 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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