Correlation Between Taiwan Weighted and BES Engineering
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and BES Engineering 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 BES Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and BES Engineering Co, you can compare the effects of market volatilities on Taiwan Weighted and BES Engineering 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 BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and BES Engineering.
Diversification Opportunities for Taiwan Weighted and BES Engineering
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taiwan and BES is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering 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 BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and BES Engineering go up and down completely randomly.
Pair Corralation between Taiwan Weighted and BES Engineering
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the BES Engineering. But the index apears to be less risky and, when comparing its historical volatility, Taiwan Weighted is 1.93 times less risky than BES Engineering. The index trades about -0.13 of its potential returns per unit of risk. The BES Engineering Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,090 in BES Engineering Co on August 30, 2024 and sell it today you would earn a total of 20.00 from holding BES Engineering Co or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Taiwan Weighted vs. BES Engineering Co
Performance |
| Timeline |
Taiwan Weighted and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
BES Engineering Co
Pair trading matchups for BES Engineering
Pair Trading with Taiwan Weighted and BES Engineering
The main advantage of trading using opposite Taiwan Weighted and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, BES Engineering 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 BES Engineering will offset losses from the drop in BES Engineering's long position.| Taiwan Weighted vs. V Tac Technology Co | Taiwan Weighted vs. Sesoda Corp | Taiwan Weighted vs. Asmedia Technology | Taiwan Weighted vs. Oceanic Beverages Co |
| BES Engineering vs. Yulon Motor Co | BES Engineering vs. Far Eastern Department | BES Engineering vs. China Steel Corp | BES Engineering vs. Chang Hwa Commercial |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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