Correlation Between Taiwan Weighted and I Sheng
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and I Sheng 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 I Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and I Sheng Electric Wire, you can compare the effects of market volatilities on Taiwan Weighted and I Sheng 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 I Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and I Sheng.
Diversification Opportunities for Taiwan Weighted and I Sheng
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and 6115 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and I Sheng Electric Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Sheng Electric 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 I Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Sheng Electric has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and I Sheng go up and down completely randomly.
Pair Corralation between Taiwan Weighted and I Sheng
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.24 times more return on investment than I Sheng. However, Taiwan Weighted is 1.24 times more volatile than I Sheng Electric Wire. It trades about 0.09 of its potential returns per unit of risk. I Sheng Electric Wire is currently generating about 0.06 per unit of risk. If you would invest 1,473,164 in Taiwan Weighted on September 3, 2024 and sell it today you would earn a total of 800,529 from holding Taiwan Weighted or generate 54.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.69% |
| Values | Daily Returns |
Taiwan Weighted vs. I Sheng Electric Wire
Performance |
| Timeline |
Taiwan Weighted and I Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
I Sheng Electric Wire
Pair trading matchups for I Sheng
Pair Trading with Taiwan Weighted and I Sheng
The main advantage of trading using opposite Taiwan Weighted and I Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, I Sheng 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 I Sheng will offset losses from the drop in I Sheng's long position.| Taiwan Weighted vs. Min Aik Technology | Taiwan Weighted vs. CHINA DEVELOPMENT FINANCIAL | Taiwan Weighted vs. Mega Financial Holding | Taiwan Weighted vs. Taishin Financial Holding |
| I Sheng vs. RiTdisplay Corp | I Sheng vs. WinMate Communication INC | I Sheng vs. Hannstar Display Corp | I Sheng vs. Unitech Computer 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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