Correlation Between Taiwan Fu and San Fu
Can any of the company-specific risk be diversified away by investing in both Taiwan Fu and San Fu 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 San Fu 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 San Fu Chemical, you can compare the effects of market volatilities on Taiwan Fu and San Fu 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 San Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Fu and San Fu.
Diversification Opportunities for Taiwan Fu and San Fu
Very weak diversification
The 3 months correlation between Taiwan and San is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Fu Hsing and San Fu Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fu Chemical 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 San Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fu Chemical has no effect on the direction of Taiwan Fu i.e., Taiwan Fu and San Fu go up and down completely randomly.
Pair Corralation between Taiwan Fu and San Fu
Assuming the 90 days trading horizon Taiwan Fu Hsing is expected to under-perform the San Fu. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Fu Hsing is 1.29 times less risky than San Fu. The stock trades about -0.02 of its potential returns per unit of risk. The San Fu Chemical is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 14,050 in San Fu Chemical on September 3, 2024 and sell it today you would lose (650.00) from holding San Fu Chemical or give up 4.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Fu Hsing vs. San Fu Chemical
Performance |
| Timeline |
| Taiwan Fu Hsing |
| San Fu Chemical |
Taiwan Fu and San Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Fu and San Fu
The main advantage of trading using opposite Taiwan Fu and San Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Fu position performs unexpectedly, San Fu 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 San Fu will offset losses from the drop in San Fu'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 |
| San Fu vs. Delta Electronics | San Fu vs. China Steel Chemical | San Fu vs. WiseChip Semiconductor | San Fu vs. Novatek Microelectronics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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