Correlation Between Taiwan Secom and Lily Textile
Can any of the company-specific risk be diversified away by investing in both Taiwan Secom and Lily Textile 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 Lily Textile 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 Lily Textile Co, you can compare the effects of market volatilities on Taiwan Secom and Lily Textile 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 Lily Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Secom and Lily Textile.
Diversification Opportunities for Taiwan Secom and Lily Textile
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Lily is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Secom Co and Lily Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lily Textile 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 Lily Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lily Textile has no effect on the direction of Taiwan Secom i.e., Taiwan Secom and Lily Textile go up and down completely randomly.
Pair Corralation between Taiwan Secom and Lily Textile
Assuming the 90 days trading horizon Taiwan Secom Co is expected to under-perform the Lily Textile. In addition to that, Taiwan Secom is 1.33 times more volatile than Lily Textile Co. It trades about -0.15 of its total potential returns per unit of risk. Lily Textile Co is currently generating about -0.1 per unit of volatility. If you would invest 3,375 in Lily Textile Co on September 1, 2024 and sell it today you would lose (110.00) from holding Lily Textile Co or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Taiwan Secom Co vs. Lily Textile Co
Performance |
| Timeline |
| Taiwan Secom |
| Lily Textile |
Taiwan Secom and Lily Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Secom and Lily Textile
The main advantage of trading using opposite Taiwan Secom and Lily Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Secom position performs unexpectedly, Lily Textile 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 Lily Textile will offset losses from the drop in Lily Textile's long position.| Taiwan Secom vs. Taiwan Shin Kong | Taiwan Secom vs. President Chain Store | Taiwan Secom vs. Yulon Finance Corp | Taiwan Secom vs. Giant Manufacturing Co |
| Lily Textile vs. Chaintech Technology Corp | Lily Textile vs. AVerMedia Technologies | Lily Textile vs. Avision | Lily Textile vs. Clevo Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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