Correlation Between Taiwan Weighted and Kunyue Development
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Kunyue Development 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 Kunyue Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Kunyue Development Co, you can compare the effects of market volatilities on Taiwan Weighted and Kunyue Development 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 Kunyue Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Kunyue Development.
Diversification Opportunities for Taiwan Weighted and Kunyue Development
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taiwan and Kunyue is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development 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 Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Kunyue Development go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Kunyue Development
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Kunyue Development. But the index apears to be less risky and, when comparing its historical volatility, Taiwan Weighted is 3.25 times less risky than Kunyue Development. The index trades about -0.11 of its potential returns per unit of risk. The Kunyue Development Co is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,415 in Kunyue Development Co on August 31, 2024 and sell it today you would earn a total of 675.00 from holding Kunyue Development Co or generate 19.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Taiwan Weighted vs. Kunyue Development Co
Performance |
| Timeline |
Taiwan Weighted and Kunyue Development Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Kunyue Development Co
Pair trading matchups for Kunyue Development
Pair Trading with Taiwan Weighted and Kunyue Development
The main advantage of trading using opposite Taiwan Weighted and Kunyue Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Kunyue Development 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 Kunyue Development will offset losses from the drop in Kunyue Development's long position.| Taiwan Weighted vs. Level Biotechnology | Taiwan Weighted vs. Hsin Kuang Steel | Taiwan Weighted vs. China Steel Corp | Taiwan Weighted vs. Sunmax Biotechnology Co |
| Kunyue Development vs. Simple Mart Retail | Kunyue Development vs. Chernan Metal Industrial | Kunyue Development vs. BenQ Materials Corp | Kunyue Development vs. Daxin Materials Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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