Correlation Between Taiwan Weighted and Chia Chang
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Chia Chang 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 Chia Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Chia Chang Co, you can compare the effects of market volatilities on Taiwan Weighted and Chia Chang 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 Chia Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Chia Chang.
Diversification Opportunities for Taiwan Weighted and Chia Chang
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Chia is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Chia Chang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Chang 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 Chia Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Chang has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Chia Chang go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Chia Chang
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.16 times more return on investment than Chia Chang. However, Taiwan Weighted is 1.16 times more volatile than Chia Chang Co. It trades about 0.1 of its potential returns per unit of risk. Chia Chang Co is currently generating about 0.0 per unit of risk. If you would invest 1,667,203 in Taiwan Weighted on September 4, 2024 and sell it today you would earn a total of 606,490 from holding Taiwan Weighted or generate 36.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.25% |
| Values | Daily Returns |
Taiwan Weighted vs. Chia Chang Co
Performance |
| Timeline |
Taiwan Weighted and Chia Chang Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Chia Chang Co
Pair trading matchups for Chia Chang
Pair Trading with Taiwan Weighted and Chia Chang
The main advantage of trading using opposite Taiwan Weighted and Chia Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Chia Chang 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 Chia Chang will offset losses from the drop in Chia Chang's long position.| Taiwan Weighted vs. U Ming Marine Transport | Taiwan Weighted vs. Tainet Communication System | Taiwan Weighted vs. Grand Ocean Retail | Taiwan Weighted vs. Newretail Co |
| Chia Chang vs. FSP Technology | Chia Chang vs. HannStar Board Corp | Chia Chang vs. Taiwan Surface Mounting | Chia Chang vs. Emerging Display Technologies |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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