Correlation Between Giant Manufacturing and Great Taipei
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Great Taipei 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 Giant Manufacturing and Great Taipei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Giant Manufacturing Co and Great Taipei Gas, you can compare the effects of market volatilities on Giant Manufacturing and Great Taipei 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 Giant Manufacturing with a short position of Great Taipei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Great Taipei.
Diversification Opportunities for Giant Manufacturing and Great Taipei
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Giant and Great is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Great Taipei Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Taipei Gas and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with Great Taipei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Taipei Gas has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Great Taipei go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Great Taipei
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Great Taipei. In addition to that, Giant Manufacturing is 8.56 times more volatile than Great Taipei Gas. It trades about -0.42 of its total potential returns per unit of risk. Great Taipei Gas is currently generating about 0.22 per unit of volatility. If you would invest 3,005 in Great Taipei Gas on August 30, 2024 and sell it today you would earn a total of 35.00 from holding Great Taipei Gas or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Great Taipei Gas
Performance |
| Timeline |
| Giant Manufacturing |
| Great Taipei Gas |
Giant Manufacturing and Great Taipei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Great Taipei
The main advantage of trading using opposite Giant Manufacturing and Great Taipei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Great Taipei 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 Great Taipei will offset losses from the drop in Great Taipei's long position.| Giant Manufacturing vs. Merida Industry Co | Giant Manufacturing vs. President Chain Store | Giant Manufacturing vs. Cheng Shin Rubber | Giant Manufacturing vs. Uni President Enterprises Corp |
| Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Taiwan Cogeneration Corp | Great Taipei vs. Shin Hai Gas |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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