Correlation Between Taiwan Weighted and Ten Ren
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Ten Ren 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 Ten Ren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Ten Ren Tea, you can compare the effects of market volatilities on Taiwan Weighted and Ten Ren 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 Ten Ren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Ten Ren.
Diversification Opportunities for Taiwan Weighted and Ten Ren
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Ten is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Ten Ren Tea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ten Ren Tea 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 Ten Ren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ten Ren Tea has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Ten Ren go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Ten Ren
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.84 times more return on investment than Ten Ren. However, Taiwan Weighted is 1.84 times more volatile than Ten Ren Tea. It trades about 0.03 of its potential returns per unit of risk. Ten Ren Tea is currently generating about -0.06 per unit of risk. If you would invest 2,148,488 in Taiwan Weighted on September 3, 2024 and sell it today you would earn a total of 77,762 from holding Taiwan Weighted or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.03% |
| Values | Daily Returns |
Taiwan Weighted vs. Ten Ren Tea
Performance |
| Timeline |
Taiwan Weighted and Ten Ren Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Ten Ren Tea
Pair trading matchups for Ten Ren
Pair Trading with Taiwan Weighted and Ten Ren
The main advantage of trading using opposite Taiwan Weighted and Ten Ren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Ten Ren 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 Ten Ren will offset losses from the drop in Ten Ren's long position.| Taiwan Weighted vs. Min Aik Technology | Taiwan Weighted vs. CHINA DEVELOPMENT FINANCIAL | Taiwan Weighted vs. Mega Financial Holding | Taiwan Weighted vs. Taishin Financial Holding |
| Ten Ren vs. Standard Foods Corp | Ten Ren vs. TTET Union Corp | Ten Ren vs. Great Wall Enterprise | Ten Ren vs. Lian Hwa Foods |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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