Correlation Between Taiwan Weighted and Wah Lee
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Wah Lee 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 Wah Lee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Wah Lee Industrial, you can compare the effects of market volatilities on Taiwan Weighted and Wah Lee 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 Wah Lee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Wah Lee.
Diversification Opportunities for Taiwan Weighted and Wah Lee
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Wah is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Wah Lee Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Lee Industrial 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 Wah Lee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Lee Industrial has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Wah Lee go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Wah Lee
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.62 times more return on investment than Wah Lee. However, Taiwan Weighted is 1.61 times less risky than Wah Lee. It trades about 0.09 of its potential returns per unit of risk. Wah Lee Industrial is currently generating about 0.05 per unit of risk. If you would invest 1,498,074 in Taiwan Weighted on August 26, 2024 and sell it today you would earn a total of 792,358 from holding Taiwan Weighted or generate 52.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.75% |
| Values | Daily Returns |
Taiwan Weighted vs. Wah Lee Industrial
Performance |
| Timeline |
Taiwan Weighted and Wah Lee Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Wah Lee Industrial
Pair trading matchups for Wah Lee
Pair Trading with Taiwan Weighted and Wah Lee
The main advantage of trading using opposite Taiwan Weighted and Wah Lee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Wah Lee 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 Wah Lee will offset losses from the drop in Wah Lee's long position.| Taiwan Weighted vs. Ibase Gaming | Taiwan Weighted vs. Ching Feng Home | Taiwan Weighted vs. Jinan Acetate Chemical | Taiwan Weighted vs. Hsinli Chemical Industrial |
| Wah Lee vs. Huaku Development Co | Wah Lee vs. Topco Scientific Co | Wah Lee vs. Test Research | Wah Lee vs. Shinkong Insurance 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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