Correlation Between Taiwan Weighted and Pontex Polyblend
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Pontex Polyblend 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 Pontex Polyblend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Pontex Polyblend CoLtd, you can compare the effects of market volatilities on Taiwan Weighted and Pontex Polyblend 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 Pontex Polyblend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Pontex Polyblend.
Diversification Opportunities for Taiwan Weighted and Pontex Polyblend
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Pontex is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Pontex Polyblend CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontex Polyblend CoLtd 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 Pontex Polyblend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontex Polyblend CoLtd has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Pontex Polyblend go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Pontex Polyblend
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Pontex Polyblend. But the index apears to be less risky and, when comparing its historical volatility, Taiwan Weighted is 2.55 times less risky than Pontex Polyblend. The index trades about -0.06 of its potential returns per unit of risk. The Pontex Polyblend CoLtd is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,980 in Pontex Polyblend CoLtd on August 25, 2024 and sell it today you would earn a total of 405.00 from holding Pontex Polyblend CoLtd or generate 20.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Taiwan Weighted vs. Pontex Polyblend CoLtd
Performance |
| Timeline |
Taiwan Weighted and Pontex Polyblend Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Pontex Polyblend CoLtd
Pair trading matchups for Pontex Polyblend
Pair Trading with Taiwan Weighted and Pontex Polyblend
The main advantage of trading using opposite Taiwan Weighted and Pontex Polyblend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Pontex Polyblend 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 Pontex Polyblend will offset losses from the drop in Pontex Polyblend's long position.| Taiwan Weighted vs. Ibase Gaming | Taiwan Weighted vs. Ching Feng Home | Taiwan Weighted vs. Jinan Acetate Chemical | Taiwan Weighted vs. Hsinli Chemical Industrial |
| Pontex Polyblend vs. Cheng Shin Rubber | Pontex Polyblend vs. Nankang Rubber Tire | Pontex Polyblend vs. USI Corp | Pontex Polyblend vs. Asia Polymer 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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