Correlation Between Taiwan Weighted and Yong Shun
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Yong Shun 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 Yong Shun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Yong Shun Chemical, you can compare the effects of market volatilities on Taiwan Weighted and Yong Shun 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 Yong Shun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Yong Shun.
Diversification Opportunities for Taiwan Weighted and Yong Shun
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Yong is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Yong Shun Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Shun Chemical 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 Yong Shun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Shun Chemical has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Yong Shun go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Yong Shun
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.83 times more return on investment than Yong Shun. However, Taiwan Weighted is 1.2 times less risky than Yong Shun. It trades about -0.07 of its potential returns per unit of risk. Yong Shun Chemical is currently generating about -0.25 per unit of risk. If you would invest 2,352,964 in Taiwan Weighted on September 12, 2024 and sell it today you would lose (40,456) from holding Taiwan Weighted or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Weighted vs. Yong Shun Chemical
Performance |
| Timeline |
Taiwan Weighted and Yong Shun Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Yong Shun Chemical
Pair trading matchups for Yong Shun
Pair Trading with Taiwan Weighted and Yong Shun
The main advantage of trading using opposite Taiwan Weighted and Yong Shun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Yong Shun 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 Yong Shun will offset losses from the drop in Yong Shun's long position.| Taiwan Weighted vs. STL Technology Co | Taiwan Weighted vs. Arbor Technology | Taiwan Weighted vs. Voltronic Power Technology | Taiwan Weighted vs. Highlight Tech |
| Yong Shun vs. Tainan Spinning Co | Yong Shun vs. Lealea Enterprise Co | Yong Shun vs. China Petrochemical Development | Yong Shun vs. Ruentex Development 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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