Correlation Between Taiwan Weighted and E Ink
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and E Ink 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 E Ink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and E Ink Holdings, you can compare the effects of market volatilities on Taiwan Weighted and E Ink 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 E Ink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and E Ink.
Diversification Opportunities for Taiwan Weighted and E Ink
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and 8069 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and E Ink Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Ink Holdings 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 E Ink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Ink Holdings has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and E Ink go up and down completely randomly.
Pair Corralation between Taiwan Weighted and E Ink
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.52 times less return on investment than E Ink. But when comparing it to its historical volatility, Taiwan Weighted is 2.31 times less risky than E Ink. It trades about 0.09 of its potential returns per unit of risk. E Ink Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16,579 in E Ink Holdings on August 31, 2024 and sell it today you would earn a total of 11,571 from holding E Ink Holdings or generate 69.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.91% |
| Values | Daily Returns |
Taiwan Weighted vs. E Ink Holdings
Performance |
| Timeline |
Taiwan Weighted and E Ink Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
E Ink Holdings
Pair trading matchups for E Ink
Pair Trading with Taiwan Weighted and E Ink
The main advantage of trading using opposite Taiwan Weighted and E Ink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, E Ink 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 E Ink will offset losses from the drop in E Ink'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 |
| E Ink vs. Hon Hai Precision | E Ink vs. Delta Electronics | E Ink vs. LARGAN Precision Co | E Ink vs. Yageo 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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