Correlation Between Taiwan Weighted and Kwong Fong
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Kwong Fong 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 Kwong Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Kwong Fong Industries, you can compare the effects of market volatilities on Taiwan Weighted and Kwong Fong 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 Kwong Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Kwong Fong.
Diversification Opportunities for Taiwan Weighted and Kwong Fong
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Kwong is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Kwong Fong Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwong Fong Industries 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 Kwong Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwong Fong Industries has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Kwong Fong go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Kwong Fong
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.64 times more return on investment than Kwong Fong. However, Taiwan Weighted is 1.56 times less risky than Kwong Fong. It trades about -0.05 of its potential returns per unit of risk. Kwong Fong Industries is currently generating about -0.18 per unit of risk. If you would invest 2,319,807 in Taiwan Weighted on August 28, 2024 and sell it today you would lose (24,970) from holding Taiwan Weighted or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Taiwan Weighted vs. Kwong Fong Industries
Performance |
| Timeline |
Taiwan Weighted and Kwong Fong Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Kwong Fong Industries
Pair trading matchups for Kwong Fong
Pair Trading with Taiwan Weighted and Kwong Fong
The main advantage of trading using opposite Taiwan Weighted and Kwong Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Kwong Fong 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 Kwong Fong will offset losses from the drop in Kwong Fong's 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 |
| Kwong Fong vs. Taiwan Semiconductor Manufacturing | Kwong Fong vs. Hon Hai Precision | Kwong Fong vs. MediaTek | Kwong Fong vs. Chunghwa Telecom Co |
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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