Correlation Between Taiwan Shin and Zinwell
Can any of the company-specific risk be diversified away by investing in both Taiwan Shin and Zinwell 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 Shin and Zinwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Shin Kong and Zinwell, you can compare the effects of market volatilities on Taiwan Shin and Zinwell 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 Shin with a short position of Zinwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Shin and Zinwell.
Diversification Opportunities for Taiwan Shin and Zinwell
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Zinwell is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Shin Kong and Zinwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinwell and Taiwan Shin 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 Shin Kong are associated (or correlated) with Zinwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinwell has no effect on the direction of Taiwan Shin i.e., Taiwan Shin and Zinwell go up and down completely randomly.
Pair Corralation between Taiwan Shin and Zinwell
Assuming the 90 days trading horizon Taiwan Shin Kong is expected to generate 0.28 times more return on investment than Zinwell. However, Taiwan Shin Kong is 3.55 times less risky than Zinwell. It trades about -0.01 of its potential returns per unit of risk. Zinwell is currently generating about -0.01 per unit of risk. If you would invest 4,140 in Taiwan Shin Kong on August 28, 2024 and sell it today you would lose (15.00) from holding Taiwan Shin Kong or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Shin Kong vs. Zinwell
Performance |
| Timeline |
| Taiwan Shin Kong |
| Zinwell |
Taiwan Shin and Zinwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Shin and Zinwell
The main advantage of trading using opposite Taiwan Shin and Zinwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Shin position performs unexpectedly, Zinwell 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 Zinwell will offset losses from the drop in Zinwell's long position.| Taiwan Shin vs. Taiwan Secom Co | Taiwan Shin vs. Yulon Finance Corp | Taiwan Shin vs. CHC Resources Corp | Taiwan Shin vs. Nak Sealing Technologies |
| Zinwell vs. Clevo Co | Zinwell vs. D Link Corp | Zinwell vs. Cheng Uei Precision | Zinwell vs. Senao International Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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