Correlation Between Taiwan Weighted and Chyang Sheng
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Chyang Sheng 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 Chyang Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Chyang Sheng Dyeing, you can compare the effects of market volatilities on Taiwan Weighted and Chyang Sheng 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 Chyang Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Chyang Sheng.
Diversification Opportunities for Taiwan Weighted and Chyang Sheng
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Chyang is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Chyang Sheng Dyeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chyang Sheng Dyeing 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 Chyang Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chyang Sheng Dyeing has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Chyang Sheng go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Chyang Sheng
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Chyang Sheng. But the index apears to be less risky and, when comparing its historical volatility, Taiwan Weighted is 1.5 times less risky than Chyang Sheng. The index trades about -0.11 of its potential returns per unit of risk. The Chyang Sheng Dyeing is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,360 in Chyang Sheng Dyeing on August 31, 2024 and sell it today you would earn a total of 125.00 from holding Chyang Sheng Dyeing or generate 5.3% 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. Chyang Sheng Dyeing
Performance |
| Timeline |
Taiwan Weighted and Chyang Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Chyang Sheng Dyeing
Pair trading matchups for Chyang Sheng
Pair Trading with Taiwan Weighted and Chyang Sheng
The main advantage of trading using opposite Taiwan Weighted and Chyang Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Chyang Sheng 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 Chyang Sheng will offset losses from the drop in Chyang Sheng's long position.| Taiwan Weighted vs. Level Biotechnology | Taiwan Weighted vs. Hsin Kuang Steel | Taiwan Weighted vs. China Steel Corp | Taiwan Weighted vs. Sunmax Biotechnology Co |
| Chyang Sheng vs. Est Global Apparel | Chyang Sheng vs. Chien Kuo Construction | Chyang Sheng vs. Simple Mart Retail | Chyang Sheng vs. Pacific Construction 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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