Correlation Between Taiwan Weighted and Sunfon Construction
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Sunfon Construction 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 Sunfon Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Sunfon Construction Co, you can compare the effects of market volatilities on Taiwan Weighted and Sunfon Construction 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 Sunfon Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Sunfon Construction.
Diversification Opportunities for Taiwan Weighted and Sunfon Construction
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Sunfon is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Sunfon Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfon Construction 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 Sunfon Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfon Construction has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Sunfon Construction go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Sunfon Construction
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.06 times more return on investment than Sunfon Construction. However, Taiwan Weighted is 1.06 times more volatile than Sunfon Construction Co. It trades about 0.04 of its potential returns per unit of risk. Sunfon Construction Co is currently generating about -0.11 per unit of risk. If you would invest 2,226,809 in Taiwan Weighted on November 28, 2024 and sell it today you would earn a total of 101,763 from holding Taiwan Weighted or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.46% |
| Values | Daily Returns |
Taiwan Weighted vs. Sunfon Construction Co
Performance |
| Timeline |
Taiwan Weighted and Sunfon Construction Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Sunfon Construction Co
Pair trading matchups for Sunfon Construction
Pair Trading with Taiwan Weighted and Sunfon Construction
The main advantage of trading using opposite Taiwan Weighted and Sunfon Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Sunfon Construction 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 Sunfon Construction will offset losses from the drop in Sunfon Construction's long position.| Taiwan Weighted vs. Kao Fong Machinery | Taiwan Weighted vs. Te Chang Construction | Taiwan Weighted vs. Strong H Machinery | Taiwan Weighted vs. Advanced Wireless Semiconductor |
| Sunfon Construction vs. Winstek Semiconductor Co | Sunfon Construction vs. Weltrend Semiconductor | Sunfon Construction vs. China Metal Products | Sunfon Construction vs. Orient Semiconductor Electronics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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