Correlation Between Taiwan Weighted and Great China
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Great China 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 Great China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Great China Metal, you can compare the effects of market volatilities on Taiwan Weighted and Great China 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 Great China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Great China.
Diversification Opportunities for Taiwan Weighted and Great China
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Taiwan and Great is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Great China Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great China Metal 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 Great China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great China Metal has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Great China go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Great China
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 2.49 times more return on investment than Great China. However, Taiwan Weighted is 2.49 times more volatile than Great China Metal. It trades about 0.09 of its potential returns per unit of risk. Great China Metal is currently generating about -0.01 per unit of risk. If you would invest 1,452,296 in Taiwan Weighted on September 3, 2024 and sell it today you would earn a total of 773,954 from holding Taiwan Weighted or generate 53.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.96% |
| Values | Daily Returns |
Taiwan Weighted vs. Great China Metal
Performance |
| Timeline |
Taiwan Weighted and Great China Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Great China Metal
Pair trading matchups for Great China
Pair Trading with Taiwan Weighted and Great China
The main advantage of trading using opposite Taiwan Weighted and Great China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Great China 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 Great China will offset losses from the drop in Great China'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 |
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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