Correlation Between Globe Union and Taiwan Fu
Can any of the company-specific risk be diversified away by investing in both Globe Union and Taiwan Fu 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 Globe Union and Taiwan Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Union Industrial and Taiwan Fu Hsing, you can compare the effects of market volatilities on Globe Union and Taiwan Fu 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 Globe Union with a short position of Taiwan Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Union and Taiwan Fu.
Diversification Opportunities for Globe Union and Taiwan Fu
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Globe and Taiwan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Globe Union Industrial and Taiwan Fu Hsing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Fu Hsing and Globe Union 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 Globe Union Industrial are associated (or correlated) with Taiwan Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Fu Hsing has no effect on the direction of Globe Union i.e., Globe Union and Taiwan Fu go up and down completely randomly.
Pair Corralation between Globe Union and Taiwan Fu
Assuming the 90 days trading horizon Globe Union Industrial is expected to under-perform the Taiwan Fu. But the stock apears to be less risky and, when comparing its historical volatility, Globe Union Industrial is 1.16 times less risky than Taiwan Fu. The stock trades about -0.27 of its potential returns per unit of risk. The Taiwan Fu Hsing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,280 in Taiwan Fu Hsing on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Taiwan Fu Hsing or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Globe Union Industrial vs. Taiwan Fu Hsing
Performance |
| Timeline |
| Globe Union Industrial |
| Taiwan Fu Hsing |
Globe Union and Taiwan Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Union and Taiwan Fu
The main advantage of trading using opposite Globe Union and Taiwan Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Union position performs unexpectedly, Taiwan Fu 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 Fu will offset losses from the drop in Taiwan Fu's long position.| Globe Union vs. Taiwan Hon Chuan | Globe Union vs. Feng Tay Enterprises | Globe Union vs. Taiwan Fu Hsing | Globe Union vs. Basso Industry Corp |
| Taiwan Fu vs. Taiwan Shin Kong | Taiwan Fu vs. Taiwan Secom Co | Taiwan Fu vs. Pou Chen Corp | Taiwan Fu vs. Taiwan Hon Chuan |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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