Correlation Between Taiwan Shin and President Securities
Can any of the company-specific risk be diversified away by investing in both Taiwan Shin and President Securities 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 President Securities 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 President Securities Corp, you can compare the effects of market volatilities on Taiwan Shin and President Securities 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 President Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Shin and President Securities.
Diversification Opportunities for Taiwan Shin and President Securities
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and President is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Shin Kong and President Securities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Securities Corp 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 President Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Securities Corp has no effect on the direction of Taiwan Shin i.e., Taiwan Shin and President Securities go up and down completely randomly.
Pair Corralation between Taiwan Shin and President Securities
Assuming the 90 days trading horizon Taiwan Shin Kong is expected to under-perform the President Securities. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Shin Kong is 2.01 times less risky than President Securities. The stock trades about -0.06 of its potential returns per unit of risk. The President Securities Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,575 in President Securities Corp on September 1, 2024 and sell it today you would earn a total of 70.00 from holding President Securities Corp or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Taiwan Shin Kong vs. President Securities Corp
Performance |
| Timeline |
| Taiwan Shin Kong |
| President Securities Corp |
Taiwan Shin and President Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Shin and President Securities
The main advantage of trading using opposite Taiwan Shin and President Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Shin position performs unexpectedly, President Securities 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 President Securities will offset losses from the drop in President Securities' 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 |
| President Securities vs. Central Reinsurance Corp | President Securities vs. Huaku Development Co | President Securities vs. Fubon Financial Holding |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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