Correlation Between Taiwan Weighted and Lily Textile
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Lily Textile 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 Lily Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Lily Textile Co, you can compare the effects of market volatilities on Taiwan Weighted and Lily Textile 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 Lily Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Lily Textile.
Diversification Opportunities for Taiwan Weighted and Lily Textile
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Lily is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Lily Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lily Textile 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 Lily Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lily Textile has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Lily Textile go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Lily Textile
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.11 times less return on investment than Lily Textile. But when comparing it to its historical volatility, Taiwan Weighted is 1.58 times less risky than Lily Textile. It trades about 0.09 of its potential returns per unit of risk. Lily Textile Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,090 in Lily Textile Co on August 29, 2024 and sell it today you would earn a total of 1,170 from holding Lily Textile Co or generate 55.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.75% |
| Values | Daily Returns |
Taiwan Weighted vs. Lily Textile Co
Performance |
| Timeline |
Taiwan Weighted and Lily Textile Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Lily Textile Co
Pair trading matchups for Lily Textile
Pair Trading with Taiwan Weighted and Lily Textile
The main advantage of trading using opposite Taiwan Weighted and Lily Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Lily Textile 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 Lily Textile will offset losses from the drop in Lily Textile's long position.| Taiwan Weighted vs. V Tac Technology Co | Taiwan Weighted vs. Sesoda Corp | Taiwan Weighted vs. Asmedia Technology | Taiwan Weighted vs. Oceanic Beverages Co |
| Lily Textile vs. Yulon Finance Corp | Lily Textile vs. Taiwan Secom Co | Lily Textile vs. Pou Chen Corp | Lily Textile vs. Great Wall Enterprise |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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