Correlation Between Taiwan Weighted and Phison Electronics
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Phison Electronics 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 Phison Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Phison Electronics, you can compare the effects of market volatilities on Taiwan Weighted and Phison Electronics 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 Phison Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Phison Electronics.
Diversification Opportunities for Taiwan Weighted and Phison Electronics
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Phison is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Phison Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phison 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 Phison Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phison Electronics has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Phison Electronics go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Phison Electronics
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.53 times more return on investment than Phison Electronics. However, Taiwan Weighted is 1.9 times less risky than Phison Electronics. It trades about 0.04 of its potential returns per unit of risk. Phison Electronics is currently generating about -0.11 per unit of risk. If you would invest 2,237,066 in Taiwan Weighted on August 28, 2024 and sell it today you would earn a total of 57,771 from holding Taiwan Weighted or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.16% |
| Values | Daily Returns |
Taiwan Weighted vs. Phison Electronics
Performance |
| Timeline |
Taiwan Weighted and Phison Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Phison Electronics
Pair trading matchups for Phison Electronics
Pair Trading with Taiwan Weighted and Phison Electronics
The main advantage of trading using opposite Taiwan Weighted and Phison Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Phison Electronics 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 Phison Electronics will offset losses from the drop in Phison Electronics' long position.| Taiwan Weighted vs. Taichung Commercial Bank | Taiwan Weighted vs. China Times Publishing | Taiwan Weighted vs. First Insurance Co | Taiwan Weighted vs. Mega Financial Holding |
| Phison Electronics vs. Chung Hwa Food | Phison Electronics vs. Sports Gear Co | Phison Electronics vs. Asia Metal Industries | Phison Electronics vs. Lian Hwa Foods |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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