Correlation Between Taiwan Weighted and Hsin Kao
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Hsin Kao 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 Hsin Kao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Hsin Kao Gas, you can compare the effects of market volatilities on Taiwan Weighted and Hsin Kao 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 Hsin Kao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Hsin Kao.
Diversification Opportunities for Taiwan Weighted and Hsin Kao
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and Hsin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Hsin Kao Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsin Kao Gas 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 Hsin Kao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsin Kao Gas has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Hsin Kao go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Hsin Kao
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Hsin Kao. In addition to that, Taiwan Weighted is 1.66 times more volatile than Hsin Kao Gas. It trades about -0.07 of its total potential returns per unit of risk. Hsin Kao Gas is currently generating about 0.06 per unit of volatility. If you would invest 3,420 in Hsin Kao Gas on September 12, 2024 and sell it today you would earn a total of 25.00 from holding Hsin Kao Gas or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Weighted vs. Hsin Kao Gas
Performance |
| Timeline |
Taiwan Weighted and Hsin Kao Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Hsin Kao Gas
Pair trading matchups for Hsin Kao
Pair Trading with Taiwan Weighted and Hsin Kao
The main advantage of trading using opposite Taiwan Weighted and Hsin Kao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Hsin Kao 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 Hsin Kao will offset losses from the drop in Hsin Kao's long position.| Taiwan Weighted vs. STL Technology Co | Taiwan Weighted vs. Arbor Technology | Taiwan Weighted vs. Voltronic Power Technology | Taiwan Weighted vs. Highlight Tech |
| Hsin Kao vs. Great Taipei Gas | Hsin Kao vs. Shin Shin Natural | Hsin Kao vs. Shin Hai Gas | Hsin Kao vs. National Petroleum 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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