Correlation Between Korea Closed and Taiwan Closed
Can any of the company-specific risk be diversified away by investing in both Korea Closed and Taiwan Closed 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 Korea Closed and Taiwan Closed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Closed and Taiwan Closed, you can compare the effects of market volatilities on Korea Closed and Taiwan Closed 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 Korea Closed with a short position of Taiwan Closed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Closed and Taiwan Closed.
Diversification Opportunities for Korea Closed and Taiwan Closed
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Taiwan is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Korea Closed and Taiwan Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Closed and Korea Closed 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 Korea Closed are associated (or correlated) with Taiwan Closed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Closed has no effect on the direction of Korea Closed i.e., Korea Closed and Taiwan Closed go up and down completely randomly.
Pair Corralation between Korea Closed and Taiwan Closed
Allowing for the 90-day total investment horizon Korea Closed is expected to generate 0.78 times more return on investment than Taiwan Closed. However, Korea Closed is 1.28 times less risky than Taiwan Closed. It trades about 0.3 of its potential returns per unit of risk. Taiwan Closed is currently generating about -0.04 per unit of risk. If you would invest 1,844 in Korea Closed on November 1, 2024 and sell it today you would earn a total of 130.00 from holding Korea Closed or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Closed vs. Taiwan Closed
Performance |
| Timeline |
| Korea Closed |
| Taiwan Closed |
Korea Closed and Taiwan Closed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Closed and Taiwan Closed
The main advantage of trading using opposite Korea Closed and Taiwan Closed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Closed position performs unexpectedly, Taiwan Closed 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 Closed will offset losses from the drop in Taiwan Closed's long position.| Korea Closed vs. Mexico Equity And | Korea Closed vs. Western Asset Global | Korea Closed vs. New Germany Closed | Korea Closed vs. MFS Charter Income |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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