Correlation Between Taiwan Weighted and Standard Foods
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Standard Foods 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 Weighted and Standard Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Standard Foods Corp, you can compare the effects of market volatilities on Taiwan Weighted and Standard Foods 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 Weighted with a short position of Standard Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Standard Foods.
Diversification Opportunities for Taiwan Weighted and Standard Foods
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Standard is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Standard Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Foods Corp and Taiwan Weighted 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 Weighted are associated (or correlated) with Standard Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Foods Corp has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Standard Foods go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Standard Foods
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Standard Foods. In addition to that, Taiwan Weighted is 1.81 times more volatile than Standard Foods Corp. It trades about -0.11 of its total potential returns per unit of risk. Standard Foods Corp is currently generating about 0.07 per unit of volatility. If you would invest 3,780 in Standard Foods Corp on August 28, 2024 and sell it today you would earn a total of 30.00 from holding Standard Foods Corp or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Taiwan Weighted vs. Standard Foods Corp
Performance |
| Timeline |
Taiwan Weighted and Standard Foods Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Standard Foods Corp
Pair trading matchups for Standard Foods
Pair Trading with Taiwan Weighted and Standard Foods
The main advantage of trading using opposite Taiwan Weighted and Standard Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Standard Foods 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 Standard Foods will offset losses from the drop in Standard Foods' long position.| Taiwan Weighted vs. Kworld Computer Co | Taiwan Weighted vs. FDC International Hotels | Taiwan Weighted vs. Wonderful Hi Tech Co | Taiwan Weighted vs. Landis Taipei Hotel |
| Standard Foods vs. Taiwan Cement Corp | Standard Foods vs. Ruentex Development Co | Standard Foods vs. Symtek Automation Asia | Standard Foods vs. CTCI 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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