Correlation Between Taiwan Weighted and Bin Chuan
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Bin Chuan 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 Bin Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Bin Chuan Enterprise, you can compare the effects of market volatilities on Taiwan Weighted and Bin Chuan 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 Bin Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Bin Chuan.
Diversification Opportunities for Taiwan Weighted and Bin Chuan
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Bin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Bin Chuan Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bin Chuan Enterprise 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 Bin Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bin Chuan Enterprise has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Bin Chuan go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Bin Chuan
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Bin Chuan. But the index apears to be less risky and, when comparing its historical volatility, Taiwan Weighted is 4.11 times less risky than Bin Chuan. The index trades about -0.04 of its potential returns per unit of risk. The Bin Chuan Enterprise is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest 3,930 in Bin Chuan Enterprise on September 4, 2024 and sell it today you would earn a total of 2,550 from holding Bin Chuan Enterprise or generate 64.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Weighted vs. Bin Chuan Enterprise
Performance |
| Timeline |
Taiwan Weighted and Bin Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Bin Chuan Enterprise
Pair trading matchups for Bin Chuan
Pair Trading with Taiwan Weighted and Bin Chuan
The main advantage of trading using opposite Taiwan Weighted and Bin Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Bin Chuan 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 Bin Chuan will offset losses from the drop in Bin Chuan'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 |
| Bin Chuan vs. Holtek Semiconductor | Bin Chuan vs. Orient Semiconductor Electronics | Bin Chuan vs. Davicom Semiconductor | Bin Chuan vs. Taiwan Semiconductor 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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