Correlation Between Taiwan Shin and Pou Chen
Can any of the company-specific risk be diversified away by investing in both Taiwan Shin and Pou Chen 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 Pou Chen 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 Pou Chen Corp, you can compare the effects of market volatilities on Taiwan Shin and Pou Chen 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 Pou Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Shin and Pou Chen.
Diversification Opportunities for Taiwan Shin and Pou Chen
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Pou is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Shin Kong and Pou Chen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pou Chen 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 Pou Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pou Chen Corp has no effect on the direction of Taiwan Shin i.e., Taiwan Shin and Pou Chen go up and down completely randomly.
Pair Corralation between Taiwan Shin and Pou Chen
Assuming the 90 days trading horizon Taiwan Shin is expected to generate 3.03 times less return on investment than Pou Chen. But when comparing it to its historical volatility, Taiwan Shin Kong is 2.69 times less risky than Pou Chen. It trades about 0.04 of its potential returns per unit of risk. Pou Chen Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,240 in Pou Chen Corp on August 28, 2024 and sell it today you would earn a total of 1,065 from holding Pou Chen Corp or generate 32.87% 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. Pou Chen Corp
Performance |
Timeline |
Taiwan Shin Kong |
Pou Chen Corp |
Taiwan Shin and Pou Chen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Taiwan Shin and Pou Chen
The main advantage of trading using opposite Taiwan Shin and Pou Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Shin position performs unexpectedly, Pou Chen 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 Pou Chen will offset losses from the drop in Pou Chen's long position.Taiwan Shin vs. Sunny Friend Environmental | Taiwan Shin vs. TTET Union Corp | Taiwan Shin vs. ECOVE Environment Corp | Taiwan Shin vs. Yulon Finance Corp |
Pou Chen vs. Taiwan Semiconductor Manufacturing | Pou Chen vs. Hon Hai Precision | Pou Chen vs. MediaTek | Pou Chen vs. Chunghwa Telecom 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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