Correlation Between Taiwan Weighted and Feng Tay
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Feng Tay 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 Feng Tay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Feng Tay Enterprises, you can compare the effects of market volatilities on Taiwan Weighted and Feng Tay 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 Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Feng Tay.
Diversification Opportunities for Taiwan Weighted and Feng Tay
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Feng is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Feng Tay Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Tay Enterprises 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 Feng Tay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Tay Enterprises has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Feng Tay go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Feng Tay
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.69 times more return on investment than Feng Tay. However, Taiwan Weighted is 1.46 times less risky than Feng Tay. It trades about -0.05 of its potential returns per unit of risk. Feng Tay Enterprises is currently generating about -0.22 per unit of risk. If you would invest 2,319,807 in Taiwan Weighted on August 28, 2024 and sell it today you would lose (24,970) from holding Taiwan Weighted or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Taiwan Weighted vs. Feng Tay Enterprises
Performance |
| Timeline |
Taiwan Weighted and Feng Tay Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Feng Tay Enterprises
Pair trading matchups for Feng Tay
Pair Trading with Taiwan Weighted and Feng Tay
The main advantage of trading using opposite Taiwan Weighted and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Feng Tay 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 Feng Tay will offset losses from the drop in Feng Tay's 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 |
| Feng Tay vs. Pou Chen Corp | Feng Tay vs. Eclat Textile Co | Feng Tay vs. Hotai Motor Co | Feng Tay vs. Giant Manufacturing Co |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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