Correlation Between Taiwan Shin and CHC Resources
Can any of the company-specific risk be diversified away by investing in both Taiwan Shin and CHC Resources 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 CHC Resources 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 CHC Resources Corp, you can compare the effects of market volatilities on Taiwan Shin and CHC Resources 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 CHC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Shin and CHC Resources.
Diversification Opportunities for Taiwan Shin and CHC Resources
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and CHC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Shin Kong and CHC Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Resources 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 CHC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Resources Corp has no effect on the direction of Taiwan Shin i.e., Taiwan Shin and CHC Resources go up and down completely randomly.
Pair Corralation between Taiwan Shin and CHC Resources
Assuming the 90 days trading horizon Taiwan Shin is expected to generate 5.73 times less return on investment than CHC Resources. But when comparing it to its historical volatility, Taiwan Shin Kong is 2.01 times less risky than CHC Resources. It trades about 0.02 of its potential returns per unit of risk. CHC Resources Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,760 in CHC Resources Corp on August 25, 2024 and sell it today you would earn a total of 890.00 from holding CHC Resources Corp or generate 15.45% 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. CHC Resources Corp
Performance |
| Timeline |
| Taiwan Shin Kong |
| CHC Resources Corp |
Taiwan Shin and CHC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Shin and CHC Resources
The main advantage of trading using opposite Taiwan Shin and CHC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Shin position performs unexpectedly, CHC Resources 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 CHC Resources will offset losses from the drop in CHC Resources' 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 |
| CHC Resources vs. Cheng Shin Rubber | CHC Resources vs. Taiwan Cement Corp | CHC Resources vs. China Steel Chemical | CHC Resources vs. Yulon Motor 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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