Correlation Between Taiwan Weighted and Shinkong Synthetic
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Shinkong Synthetic 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 Shinkong Synthetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on Taiwan Weighted and Shinkong Synthetic 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 Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Shinkong Synthetic.
Diversification Opportunities for Taiwan Weighted and Shinkong Synthetic
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Shinkong is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber 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 Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Shinkong Synthetic go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Shinkong Synthetic
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Shinkong Synthetic. But the index apears to be less risky and, when comparing its historical volatility, Taiwan Weighted is 1.07 times less risky than Shinkong Synthetic. The index trades about -0.06 of its potential returns per unit of risk. The Shinkong Synthetic Fiber is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,555 in Shinkong Synthetic Fiber on August 25, 2024 and sell it today you would earn a total of 15.00 from holding Shinkong Synthetic Fiber or generate 0.96% 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. Shinkong Synthetic Fiber
Performance |
| Timeline |
Taiwan Weighted and Shinkong Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Shinkong Synthetic Fiber
Pair trading matchups for Shinkong Synthetic
Pair Trading with Taiwan Weighted and Shinkong Synthetic
The main advantage of trading using opposite Taiwan Weighted and Shinkong Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Shinkong Synthetic 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 Shinkong Synthetic will offset losses from the drop in Shinkong Synthetic's long position.| Taiwan Weighted vs. First Hotel Co | Taiwan Weighted vs. Great China Metal | Taiwan Weighted vs. HOYA Resort Hotel | Taiwan Weighted vs. Kindom Construction Corp |
| Shinkong Synthetic vs. Tainan Spinning Co | Shinkong Synthetic vs. Lealea Enterprise Co | Shinkong Synthetic vs. China Petrochemical Development | Shinkong Synthetic vs. Taiwan Styrene Monomer |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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