Correlation Between Taiwan Fu and Globe Union
Can any of the company-specific risk be diversified away by investing in both Taiwan Fu and Globe Union 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 Globe Union 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 Globe Union Industrial, you can compare the effects of market volatilities on Taiwan Fu and Globe Union 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 Globe Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Fu and Globe Union.
Diversification Opportunities for Taiwan Fu and Globe Union
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Globe is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Fu Hsing and Globe Union Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Union Industrial 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 Globe Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Union Industrial has no effect on the direction of Taiwan Fu i.e., Taiwan Fu and Globe Union go up and down completely randomly.
Pair Corralation between Taiwan Fu and Globe Union
Assuming the 90 days trading horizon Taiwan Fu Hsing is expected to generate 0.69 times more return on investment than Globe Union. However, Taiwan Fu Hsing is 1.45 times less risky than Globe Union. It trades about -0.01 of its potential returns per unit of risk. Globe Union Industrial is currently generating about -0.06 per unit of risk. If you would invest 5,200 in Taiwan Fu Hsing on October 23, 2024 and sell it today you would lose (10.00) from holding Taiwan Fu Hsing or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Taiwan Fu Hsing vs. Globe Union Industrial
Performance |
| Timeline |
| Taiwan Fu Hsing |
| Globe Union Industrial |
Taiwan Fu and Globe Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Fu and Globe Union
The main advantage of trading using opposite Taiwan Fu and Globe Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Fu position performs unexpectedly, Globe Union 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 Globe Union will offset losses from the drop in Globe Union's long position.| Taiwan Fu vs. Basso Industry Corp | Taiwan Fu vs. Kaulin Mfg | Taiwan Fu vs. TYC Brother Industrial | Taiwan Fu vs. Chung Hsin Electric Machinery |
| Globe Union vs. Taiwan Hon Chuan | Globe Union vs. Feng Tay Enterprises | Globe Union vs. Taiwan Fu Hsing | Globe Union vs. Basso Industry 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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