Correlation Between Taiwan Weighted and Thye Ming
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Thye Ming 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 Thye Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Thye Ming Industrial, you can compare the effects of market volatilities on Taiwan Weighted and Thye Ming 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 Thye Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Thye Ming.
Diversification Opportunities for Taiwan Weighted and Thye Ming
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Taiwan and Thye is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Thye Ming Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thye Ming Industrial 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 Thye Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thye Ming Industrial has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Thye Ming go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Thye Ming
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.4 times less return on investment than Thye Ming. But when comparing it to its historical volatility, Taiwan Weighted is 1.68 times less risky than Thye Ming. It trades about 0.08 of its potential returns per unit of risk. Thye Ming Industrial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,845 in Thye Ming Industrial on October 25, 2024 and sell it today you would earn a total of 2,765 from holding Thye Ming Industrial or generate 71.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.57% |
| Values | Daily Returns |
Taiwan Weighted vs. Thye Ming Industrial
Performance |
| Timeline |
Taiwan Weighted and Thye Ming Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Thye Ming Industrial
Pair trading matchups for Thye Ming
Pair Trading with Taiwan Weighted and Thye Ming
The main advantage of trading using opposite Taiwan Weighted and Thye Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Thye Ming 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 Thye Ming will offset losses from the drop in Thye Ming's long position.| Taiwan Weighted vs. Sea Sonic Electronics | Taiwan Weighted vs. Everlight Chemical Industrial | Taiwan Weighted vs. LandMark Optoelectronics | Taiwan Weighted vs. Taiwan Chinsan Electronic |
| Thye Ming vs. CHC Resources Corp | Thye Ming vs. Taiwan Shin Kong | Thye Ming vs. Taiwan Secom Co | Thye Ming vs. Nak Sealing Technologies |
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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