Correlation Between Taiwan Secom and Taiwan Shin
Can any of the company-specific risk be diversified away by investing in both Taiwan Secom and Taiwan Shin 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 Taiwan Shin 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 Taiwan Shin Kong, you can compare the effects of market volatilities on Taiwan Secom and Taiwan Shin 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 Taiwan Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Secom and Taiwan Shin.
Diversification Opportunities for Taiwan Secom and Taiwan Shin
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Taiwan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Secom Co and Taiwan Shin Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Shin Kong 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 Taiwan Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Shin Kong has no effect on the direction of Taiwan Secom i.e., Taiwan Secom and Taiwan Shin go up and down completely randomly.
Pair Corralation between Taiwan Secom and Taiwan Shin
Assuming the 90 days trading horizon Taiwan Secom Co is expected to generate 2.98 times more return on investment than Taiwan Shin. However, Taiwan Secom is 2.98 times more volatile than Taiwan Shin Kong. It trades about 0.03 of its potential returns per unit of risk. Taiwan Shin Kong is currently generating about -0.06 per unit of risk. If you would invest 13,600 in Taiwan Secom Co on August 27, 2024 and sell it today you would earn a total of 100.00 from holding Taiwan Secom Co or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Secom Co vs. Taiwan Shin Kong
Performance |
| Timeline |
| Taiwan Secom |
| Taiwan Shin Kong |
Taiwan Secom and Taiwan Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Secom and Taiwan Shin
The main advantage of trading using opposite Taiwan Secom and Taiwan Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Secom position performs unexpectedly, Taiwan Shin 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 Taiwan Shin will offset losses from the drop in Taiwan Shin'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 |
| Taiwan Shin vs. Sunny Friend Environmental | Taiwan Shin vs. TTET Union Corp | Taiwan Shin vs. ECOVE Environment Corp | Taiwan Shin vs. Yulon Finance Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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