Correlation Between Taiwan Paiho and Paiho Shih
Can any of the company-specific risk be diversified away by investing in both Taiwan Paiho and Paiho Shih 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 Paiho and Paiho Shih into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Paiho and Paiho Shih Holdings, you can compare the effects of market volatilities on Taiwan Paiho and Paiho Shih 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 Paiho with a short position of Paiho Shih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Paiho and Paiho Shih.
Diversification Opportunities for Taiwan Paiho and Paiho Shih
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Taiwan and Paiho is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Paiho and Paiho Shih Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paiho Shih Holdings and Taiwan Paiho 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 Paiho are associated (or correlated) with Paiho Shih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paiho Shih Holdings has no effect on the direction of Taiwan Paiho i.e., Taiwan Paiho and Paiho Shih go up and down completely randomly.
Pair Corralation between Taiwan Paiho and Paiho Shih
Assuming the 90 days trading horizon Taiwan Paiho is expected to generate 1.74 times less return on investment than Paiho Shih. But when comparing it to its historical volatility, Taiwan Paiho is 1.26 times less risky than Paiho Shih. It trades about 0.13 of its potential returns per unit of risk. Paiho Shih Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,710 in Paiho Shih Holdings on September 13, 2024 and sell it today you would earn a total of 240.00 from holding Paiho Shih Holdings or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Taiwan Paiho vs. Paiho Shih Holdings
Performance |
| Timeline |
| Taiwan Paiho |
| Paiho Shih Holdings |
Taiwan Paiho and Paiho Shih Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Paiho and Paiho Shih
The main advantage of trading using opposite Taiwan Paiho and Paiho Shih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Paiho position performs unexpectedly, Paiho Shih 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 Paiho Shih will offset losses from the drop in Paiho Shih's long position.| Taiwan Paiho vs. Feng Tay Enterprises | Taiwan Paiho vs. Makalot Industrial Co | Taiwan Paiho vs. Pou Chen Corp | Taiwan Paiho vs. Eclat Textile Co |
| Paiho Shih vs. Feng Tay Enterprises | Paiho Shih vs. Ruentex Development Co | Paiho Shih vs. WiseChip Semiconductor | Paiho Shih vs. Novatek Microelectronics Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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