Correlation Between Taiwan Shin and First Insurance
Can any of the company-specific risk be diversified away by investing in both Taiwan Shin and First Insurance 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 First Insurance 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 First Insurance Co, you can compare the effects of market volatilities on Taiwan Shin and First Insurance 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 First Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Shin and First Insurance.
Diversification Opportunities for Taiwan Shin and First Insurance
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and First is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Shin Kong and First Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Insurance 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 First Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Insurance has no effect on the direction of Taiwan Shin i.e., Taiwan Shin and First Insurance go up and down completely randomly.
Pair Corralation between Taiwan Shin and First Insurance
Assuming the 90 days trading horizon Taiwan Shin is expected to generate 4.56 times less return on investment than First Insurance. But when comparing it to its historical volatility, Taiwan Shin Kong is 2.38 times less risky than First Insurance. It trades about 0.04 of its potential returns per unit of risk. First Insurance Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,580 in First Insurance Co on August 30, 2024 and sell it today you would earn a total of 880.00 from holding First Insurance Co or generate 55.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan Shin Kong vs. First Insurance Co
Performance |
| Timeline |
| Taiwan Shin Kong |
| First Insurance |
Taiwan Shin and First Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Shin and First Insurance
The main advantage of trading using opposite Taiwan Shin and First Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Shin position performs unexpectedly, First Insurance 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 First Insurance will offset losses from the drop in First Insurance's long position.| Taiwan Shin vs. Yulon Motor Co | Taiwan Shin vs. Far Eastern Department | Taiwan Shin vs. China Steel Corp | Taiwan Shin vs. Chang Hwa Commercial |
| First Insurance vs. Taiwan Secom Co | First Insurance vs. TTET Union Corp | First Insurance vs. China Steel Chemical | First Insurance vs. Taiwan Shin Kong |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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