Correlation Between Taiwan Hon and Pan German
Can any of the company-specific risk be diversified away by investing in both Taiwan Hon and Pan German 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 Hon and Pan German into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Hon Chuan and Pan German Universal, you can compare the effects of market volatilities on Taiwan Hon and Pan German 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 Hon with a short position of Pan German. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Hon and Pan German.
Diversification Opportunities for Taiwan Hon and Pan German
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Pan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Hon Chuan and Pan German Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan German Universal and Taiwan Hon 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 Hon Chuan are associated (or correlated) with Pan German. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan German Universal has no effect on the direction of Taiwan Hon i.e., Taiwan Hon and Pan German go up and down completely randomly.
Pair Corralation between Taiwan Hon and Pan German
Assuming the 90 days trading horizon Taiwan Hon Chuan is expected to generate 2.54 times more return on investment than Pan German. However, Taiwan Hon is 2.54 times more volatile than Pan German Universal. It trades about 0.27 of its potential returns per unit of risk. Pan German Universal is currently generating about 0.28 per unit of risk. If you would invest 15,750 in Taiwan Hon Chuan on November 29, 2024 and sell it today you would earn a total of 850.00 from holding Taiwan Hon Chuan or generate 5.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Hon Chuan vs. Pan German Universal
Performance |
| Timeline |
| Taiwan Hon Chuan |
| Pan German Universal |
Taiwan Hon and Pan German Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Hon and Pan German
The main advantage of trading using opposite Taiwan Hon and Pan German positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Hon position performs unexpectedly, Pan German 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 Pan German will offset losses from the drop in Pan German's long position.| Taiwan Hon vs. An Shin Food Services | Taiwan Hon vs. Eagle Cold Storage | Taiwan Hon vs. Standard Foods Corp | Taiwan Hon vs. Lian Hwa Foods |
| Pan German vs. Hotai Motor Co | Pan German vs. Yulon Nissan Motor | Pan German vs. Taiwan Hon Chuan | Pan German vs. Greatek Electronics |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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