Correlation Between Taiwan Weighted and Top Union
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Top Union 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 Top Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Top Union Electronics, you can compare the effects of market volatilities on Taiwan Weighted and Top Union 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 Top Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Top Union.
Diversification Opportunities for Taiwan Weighted and Top Union
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Taiwan and Top is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Top Union Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Union Electronics 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 Top Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Union Electronics has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Top Union go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Top Union
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.02 times more return on investment than Top Union. However, Taiwan Weighted is 1.02 times more volatile than Top Union Electronics. It trades about 0.03 of its potential returns per unit of risk. Top Union Electronics is currently generating about -0.03 per unit of risk. If you would invest 2,153,676 in Taiwan Weighted on September 1, 2024 and sell it today you would earn a total of 72,574 from holding Taiwan Weighted or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.06% |
| Values | Daily Returns |
Taiwan Weighted vs. Top Union Electronics
Performance |
| Timeline |
Taiwan Weighted and Top Union Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Top Union Electronics
Pair trading matchups for Top Union
Pair Trading with Taiwan Weighted and Top Union
The main advantage of trading using opposite Taiwan Weighted and Top Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Top Union 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 Top Union will offset losses from the drop in Top Union's long position.| Taiwan Weighted vs. Asustek Computer | Taiwan Weighted vs. Grand Plastic Technology | Taiwan Weighted vs. Cheng Mei Materials | Taiwan Weighted vs. Ruentex Materials Co |
| Top Union vs. Sino American Silicon Products | Top Union vs. Powertech Technology | Top Union vs. Formosa Sumco Technology | Top Union vs. Radiant Opto Electronics 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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