Correlation Between Taiwan Fu and Hota Industrial
Can any of the company-specific risk be diversified away by investing in both Taiwan Fu and Hota Industrial 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 Fu and Hota Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Fu Hsing and Hota Industrial Mfg, you can compare the effects of market volatilities on Taiwan Fu and Hota Industrial 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 Fu with a short position of Hota Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Fu and Hota Industrial.
Diversification Opportunities for Taiwan Fu and Hota Industrial
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Hota is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Fu Hsing and Hota Industrial Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hota Industrial Mfg and Taiwan Fu 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 Fu Hsing are associated (or correlated) with Hota Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hota Industrial Mfg has no effect on the direction of Taiwan Fu i.e., Taiwan Fu and Hota Industrial go up and down completely randomly.
Pair Corralation between Taiwan Fu and Hota Industrial
Assuming the 90 days trading horizon Taiwan Fu Hsing is expected to generate 0.25 times more return on investment than Hota Industrial. However, Taiwan Fu Hsing is 3.98 times less risky than Hota Industrial. It trades about 0.09 of its potential returns per unit of risk. Hota Industrial Mfg is currently generating about -0.25 per unit of risk. If you would invest 5,150 in Taiwan Fu Hsing on October 26, 2024 and sell it today you would earn a total of 60.00 from holding Taiwan Fu Hsing or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Fu Hsing vs. Hota Industrial Mfg
Performance |
| Timeline |
| Taiwan Fu Hsing |
| Hota Industrial Mfg |
Taiwan Fu and Hota Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Fu and Hota Industrial
The main advantage of trading using opposite Taiwan Fu and Hota Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Fu position performs unexpectedly, Hota Industrial 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 Hota Industrial will offset losses from the drop in Hota Industrial's long position.| Taiwan Fu vs. Taiwan Shin Kong | Taiwan Fu vs. Taiwan Secom Co | Taiwan Fu vs. Pou Chen Corp | Taiwan Fu vs. Taiwan Hon Chuan |
| Hota Industrial vs. BizLink Holding | Hota Industrial vs. Delta Electronics | Hota Industrial vs. Eclat Textile Co | Hota Industrial vs. Chroma ATE |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |