Correlation Between Taiwan Weighted and CHC Healthcare
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and CHC Healthcare 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 CHC Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and CHC Healthcare Group, you can compare the effects of market volatilities on Taiwan Weighted and CHC Healthcare 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 CHC Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and CHC Healthcare.
Diversification Opportunities for Taiwan Weighted and CHC Healthcare
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and CHC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and CHC Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Healthcare Group 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 CHC Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Healthcare Group has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and CHC Healthcare go up and down completely randomly.
Pair Corralation between Taiwan Weighted and CHC Healthcare
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.68 times more return on investment than CHC Healthcare. However, Taiwan Weighted is 1.46 times less risky than CHC Healthcare. It trades about 0.11 of its potential returns per unit of risk. CHC Healthcare Group is currently generating about -0.08 per unit of risk. If you would invest 1,614,968 in Taiwan Weighted on August 25, 2024 and sell it today you would earn a total of 675,464 from holding Taiwan Weighted or generate 41.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.12% |
| Values | Daily Returns |
Taiwan Weighted vs. CHC Healthcare Group
Performance |
| Timeline |
Taiwan Weighted and CHC Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
CHC Healthcare Group
Pair trading matchups for CHC Healthcare
Pair Trading with Taiwan Weighted and CHC Healthcare
The main advantage of trading using opposite Taiwan Weighted and CHC Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, CHC Healthcare 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 CHC Healthcare will offset losses from the drop in CHC Healthcare'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 |
| CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Sinphar Pharmaceutical Co | CHC Healthcare vs. Abnova Taiwan Corp | CHC Healthcare vs. Wellell |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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