Correlation Between Taiwan Weighted and Rectron
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Rectron 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 Rectron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Rectron, you can compare the effects of market volatilities on Taiwan Weighted and Rectron 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 Rectron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Rectron.
Diversification Opportunities for Taiwan Weighted and Rectron
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Rectron is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Rectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rectron 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 Rectron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rectron has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Rectron go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Rectron
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Rectron. But the index apears to be less risky and, when comparing its historical volatility, Taiwan Weighted is 2.59 times less risky than Rectron. The index trades about -0.12 of its potential returns per unit of risk. The Rectron is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,840 in Rectron on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Rectron or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Taiwan Weighted vs. Rectron
Performance |
| Timeline |
Taiwan Weighted and Rectron Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Rectron
Pair trading matchups for Rectron
Pair Trading with Taiwan Weighted and Rectron
The main advantage of trading using opposite Taiwan Weighted and Rectron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Rectron 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 Rectron will offset losses from the drop in Rectron's long position.| Taiwan Weighted vs. Energenesis Biomedical Co | Taiwan Weighted vs. Jia Jie Biomedical | Taiwan Weighted vs. Level Biotechnology | Taiwan Weighted vs. Medigen Biotechnology |
| Rectron vs. Microelectronics Technology | Rectron vs. Lite On Technology Corp | Rectron vs. Mosel Vitelic | Rectron vs. Orient Semiconductor Electronics |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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