Correlation Between Taiwan Weighted and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Tehmag 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 Tehmag 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 Tehmag Foods, you can compare the effects of market volatilities on Taiwan Weighted and Tehmag 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 Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Tehmag Foods.
Diversification Opportunities for Taiwan Weighted and Tehmag Foods
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taiwan and Tehmag is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods 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 Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Tehmag Foods go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Tehmag Foods
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.73 times more return on investment than Tehmag Foods. However, Taiwan Weighted is 1.73 times more volatile than Tehmag Foods. It trades about 0.07 of its potential returns per unit of risk. Tehmag Foods is currently generating about 0.06 per unit of risk. If you would invest 1,688,640 in Taiwan Weighted on September 1, 2024 and sell it today you would earn a total of 537,610 from holding Taiwan Weighted or generate 31.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.36% |
| Values | Daily Returns |
Taiwan Weighted vs. Tehmag Foods
Performance |
| Timeline |
Taiwan Weighted and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Tehmag Foods
Pair trading matchups for Tehmag Foods
Pair Trading with Taiwan Weighted and Tehmag Foods
The main advantage of trading using opposite Taiwan Weighted and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Tehmag 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.| Taiwan Weighted vs. Asustek Computer | Taiwan Weighted vs. Grand Plastic Technology | Taiwan Weighted vs. Cheng Mei Materials | Taiwan Weighted vs. Ruentex Materials Co |
| Tehmag Foods vs. Yuanta Financial Holdings | Tehmag Foods vs. Fubon Financial Holding | Tehmag Foods vs. CHINA DEVELOPMENT FINANCIAL | Tehmag Foods vs. Advanced Wireless Semiconductor |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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