Correlation Between Ching Feng and Taiwan Steel
Can any of the company-specific risk be diversified away by investing in both Ching Feng and Taiwan Steel 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 Ching Feng and Taiwan Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ching Feng Home and Taiwan Steel Union, you can compare the effects of market volatilities on Ching Feng and Taiwan Steel 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 Ching Feng with a short position of Taiwan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ching Feng and Taiwan Steel.
Diversification Opportunities for Ching Feng and Taiwan Steel
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ching and Taiwan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ching Feng Home and Taiwan Steel Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Steel Union and Ching Feng 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 Ching Feng Home are associated (or correlated) with Taiwan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Steel Union has no effect on the direction of Ching Feng i.e., Ching Feng and Taiwan Steel go up and down completely randomly.
Pair Corralation between Ching Feng and Taiwan Steel
Assuming the 90 days trading horizon Ching Feng is expected to generate 1.92 times less return on investment than Taiwan Steel. In addition to that, Ching Feng is 1.83 times more volatile than Taiwan Steel Union. It trades about 0.13 of its total potential returns per unit of risk. Taiwan Steel Union is currently generating about 0.47 per unit of volatility. If you would invest 10,450 in Taiwan Steel Union on November 28, 2024 and sell it today you would earn a total of 1,000.00 from holding Taiwan Steel Union or generate 9.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ching Feng Home vs. Taiwan Steel Union
Performance |
| Timeline |
| Ching Feng Home |
| Taiwan Steel Union |
Ching Feng and Taiwan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ching Feng and Taiwan Steel
The main advantage of trading using opposite Ching Feng and Taiwan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ching Feng position performs unexpectedly, Taiwan Steel 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 Steel will offset losses from the drop in Taiwan Steel's long position.| Ching Feng vs. Globe Union Industrial | Ching Feng vs. Taiwan Fu Hsing | Ching Feng vs. Taiwan Hon Chuan | Ching Feng vs. Feng Tay Enterprises |
| Taiwan Steel vs. Cleanaway Co | Taiwan Steel vs. Sunny Friend Environmental | Taiwan Steel vs. Topco Scientific Co | Taiwan Steel vs. Kung Long Batteries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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