Correlation Between Taiwan Weighted and Grand Pacific
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Grand Pacific 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 Grand Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Grand Pacific Petrochemical, you can compare the effects of market volatilities on Taiwan Weighted and Grand Pacific 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 Grand Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Grand Pacific.
Diversification Opportunities for Taiwan Weighted and Grand Pacific
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Grand is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Grand Pacific Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Pacific Petroc 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 Grand Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Pacific Petroc has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Grand Pacific go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Grand Pacific
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Grand Pacific. In addition to that, Taiwan Weighted is 1.25 times more volatile than Grand Pacific Petrochemical. It trades about -0.11 of its total potential returns per unit of risk. Grand Pacific Petrochemical is currently generating about 0.03 per unit of volatility. If you would invest 2,330 in Grand Pacific Petrochemical on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Grand Pacific Petrochemical or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Taiwan Weighted vs. Grand Pacific Petrochemical
Performance |
| Timeline |
Taiwan Weighted and Grand Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Grand Pacific Petrochemical
Pair trading matchups for Grand Pacific
Pair Trading with Taiwan Weighted and Grand Pacific
The main advantage of trading using opposite Taiwan Weighted and Grand Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Grand Pacific 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 Grand Pacific will offset losses from the drop in Grand Pacific's 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 |
| Grand Pacific vs. Tehmag Foods | Grand Pacific vs. Hi Lai Foods Co | Grand Pacific vs. Mechema Chemicals Int | Grand Pacific 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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