Correlation Between Taiwan Weighted and China Ecotek
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and China Ecotek 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 China Ecotek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and China Ecotek Corp, you can compare the effects of market volatilities on Taiwan Weighted and China Ecotek 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 China Ecotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and China Ecotek.
Diversification Opportunities for Taiwan Weighted and China Ecotek
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and China is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and China Ecotek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Ecotek Corp 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 China Ecotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Ecotek Corp has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and China Ecotek go up and down completely randomly.
Pair Corralation between Taiwan Weighted and China Ecotek
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.92 times more return on investment than China Ecotek. However, Taiwan Weighted is 1.09 times less risky than China Ecotek. It trades about -0.04 of its potential returns per unit of risk. China Ecotek Corp is currently generating about -0.12 per unit of risk. If you would invest 2,296,539 in Taiwan Weighted on September 4, 2024 and sell it today you would lose (22,846) from holding Taiwan Weighted or give up 0.99% 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. China Ecotek Corp
Performance |
| Timeline |
Taiwan Weighted and China Ecotek Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
China Ecotek Corp
Pair trading matchups for China Ecotek
Pair Trading with Taiwan Weighted and China Ecotek
The main advantage of trading using opposite Taiwan Weighted and China Ecotek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, China Ecotek 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 China Ecotek will offset losses from the drop in China Ecotek's long position.| Taiwan Weighted vs. U Ming Marine Transport | Taiwan Weighted vs. Tainet Communication System | Taiwan Weighted vs. Grand Ocean Retail | Taiwan Weighted vs. Newretail Co |
| China Ecotek vs. CHC Resources Corp | China Ecotek vs. China Steel Chemical | China Ecotek vs. TTET Union Corp | China Ecotek vs. Standard Foods Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |