Correlation Between Taiwan Shin and Taiwan Cooperative
Can any of the company-specific risk be diversified away by investing in both Taiwan Shin and Taiwan Cooperative 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 Taiwan Cooperative 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 Taiwan Cooperative Financial, you can compare the effects of market volatilities on Taiwan Shin and Taiwan Cooperative 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 Taiwan Cooperative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Shin and Taiwan Cooperative.
Diversification Opportunities for Taiwan Shin and Taiwan Cooperative
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Taiwan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Shin Kong and Taiwan Cooperative Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cooperative 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 Taiwan Cooperative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cooperative has no effect on the direction of Taiwan Shin i.e., Taiwan Shin and Taiwan Cooperative go up and down completely randomly.
Pair Corralation between Taiwan Shin and Taiwan Cooperative
Assuming the 90 days trading horizon Taiwan Shin Kong is expected to generate 0.78 times more return on investment than Taiwan Cooperative. However, Taiwan Shin Kong is 1.29 times less risky than Taiwan Cooperative. It trades about 0.02 of its potential returns per unit of risk. Taiwan Cooperative Financial is currently generating about -0.01 per unit of risk. If you would invest 4,015 in Taiwan Shin Kong on September 1, 2024 and sell it today you would earn a total of 90.00 from holding Taiwan Shin Kong or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Shin Kong vs. Taiwan Cooperative Financial
Performance |
| Timeline |
| Taiwan Shin Kong |
| Taiwan Cooperative |
Taiwan Shin and Taiwan Cooperative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Shin and Taiwan Cooperative
The main advantage of trading using opposite Taiwan Shin and Taiwan Cooperative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Shin position performs unexpectedly, Taiwan Cooperative 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 Taiwan Cooperative will offset losses from the drop in Taiwan Cooperative'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 |
| Taiwan Cooperative vs. Central Reinsurance Corp | Taiwan Cooperative vs. Huaku Development Co | Taiwan Cooperative 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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