Correlation Between Taiwan Weighted and Higher Way
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Higher Way 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 Higher Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Higher Way Electronic, you can compare the effects of market volatilities on Taiwan Weighted and Higher Way 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 Higher Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Higher Way.
Diversification Opportunities for Taiwan Weighted and Higher Way
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Higher is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Higher Way Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Higher Way Electronic 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 Higher Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Higher Way Electronic has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Higher Way go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Higher Way
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Higher Way. But the index apears to be less risky and, when comparing its historical volatility, Taiwan Weighted is 3.15 times less risky than Higher Way. The index trades about -0.06 of its potential returns per unit of risk. The Higher Way Electronic is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,460 in Higher Way Electronic on October 7, 2024 and sell it today you would lose (40.00) from holding Higher Way Electronic or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Weighted vs. Higher Way Electronic
Performance |
| Timeline |
Taiwan Weighted and Higher Way Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Higher Way Electronic
Pair trading matchups for Higher Way
Pair Trading with Taiwan Weighted and Higher Way
The main advantage of trading using opposite Taiwan Weighted and Higher Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Higher Way 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 Higher Way will offset losses from the drop in Higher Way's long position.| Taiwan Weighted vs. Sports Gear Co | Taiwan Weighted vs. Ligitek Electronics Co | Taiwan Weighted vs. Jetwell Computer Co | Taiwan Weighted vs. Compal Broadband Networks |
| Higher Way vs. Dimension Computer Technology | Higher Way vs. Cameo Communications | Higher Way vs. Tai Tung Communication | Higher Way vs. Compal Broadband Networks |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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