Correlation Between Taiwan Weighted and Azion
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Azion 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 Azion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Azion, you can compare the effects of market volatilities on Taiwan Weighted and Azion 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 Azion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Azion.
Diversification Opportunities for Taiwan Weighted and Azion
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and Azion is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Azion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azion 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 Azion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azion has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Azion go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Azion
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.38 times more return on investment than Azion. However, Taiwan Weighted is 2.67 times less risky than Azion. It trades about -0.16 of its potential returns per unit of risk. Azion is currently generating about -0.24 per unit of risk. If you would invest 2,296,539 in Taiwan Weighted on September 3, 2024 and sell it today you would lose (70,289) from holding Taiwan Weighted or give up 3.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Weighted vs. Azion
Performance |
| Timeline |
Taiwan Weighted and Azion Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Azion
Pair trading matchups for Azion
Pair Trading with Taiwan Weighted and Azion
The main advantage of trading using opposite Taiwan Weighted and Azion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Azion 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 Azion will offset losses from the drop in Azion'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 |
| Azion vs. Sunspring Metal Corp | Azion vs. Simple Mart Retail | Azion vs. Excelsior Medical Co | Azion vs. Dynamic Medical 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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