Correlation Between Taiwan Weighted and Yung Chi
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Yung Chi 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 Yung Chi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Yung Chi Paint, you can compare the effects of market volatilities on Taiwan Weighted and Yung Chi 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 Yung Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Yung Chi.
Diversification Opportunities for Taiwan Weighted and Yung Chi
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Yung is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Yung Chi Paint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yung Chi Paint 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 Yung Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yung Chi Paint has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Yung Chi go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Yung Chi
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.85 times more return on investment than Yung Chi. However, Taiwan Weighted is 1.85 times more volatile than Yung Chi Paint. It trades about 0.03 of its potential returns per unit of risk. Yung Chi Paint is currently generating about -0.06 per unit of risk. If you would invest 2,153,676 in Taiwan Weighted on September 1, 2024 and sell it today you would earn a total of 72,574 from holding Taiwan Weighted or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Taiwan Weighted vs. Yung Chi Paint
Performance |
| Timeline |
Taiwan Weighted and Yung Chi Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Yung Chi Paint
Pair trading matchups for Yung Chi
Pair Trading with Taiwan Weighted and Yung Chi
The main advantage of trading using opposite Taiwan Weighted and Yung Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Yung Chi 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 Yung Chi will offset losses from the drop in Yung Chi's long position.| Taiwan Weighted vs. Asustek Computer | Taiwan Weighted vs. Grand Plastic Technology | Taiwan Weighted vs. Cheng Mei Materials | Taiwan Weighted vs. Ruentex Materials Co |
| Yung Chi vs. China Steel Chemical | Yung Chi vs. Taiwan Secom Co | Yung Chi vs. Standard Foods Corp | Yung Chi vs. Eternal Materials 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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