Correlation Between Standard Foods and Taiwan Tea
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Taiwan Tea 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 Standard Foods and Taiwan Tea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Taiwan Tea Corp, you can compare the effects of market volatilities on Standard Foods and Taiwan Tea 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 Standard Foods with a short position of Taiwan Tea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Taiwan Tea.
Diversification Opportunities for Standard Foods and Taiwan Tea
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standard and Taiwan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Taiwan Tea Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Tea Corp and Standard Foods 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 Standard Foods Corp are associated (or correlated) with Taiwan Tea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Tea Corp has no effect on the direction of Standard Foods i.e., Standard Foods and Taiwan Tea go up and down completely randomly.
Pair Corralation between Standard Foods and Taiwan Tea
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the Taiwan Tea. But the stock apears to be less risky and, when comparing its historical volatility, Standard Foods Corp is 2.48 times less risky than Taiwan Tea. The stock trades about -0.02 of its potential returns per unit of risk. The Taiwan Tea Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,070 in Taiwan Tea Corp on September 13, 2024 and sell it today you would earn a total of 25.00 from holding Taiwan Tea Corp or generate 1.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Standard Foods Corp vs. Taiwan Tea Corp
Performance |
Timeline |
Standard Foods Corp |
Taiwan Tea Corp |
Standard Foods and Taiwan Tea Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Standard Foods and Taiwan Tea
The main advantage of trading using opposite Standard Foods and Taiwan Tea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Taiwan Tea 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 Taiwan Tea will offset losses from the drop in Taiwan Tea's long position.Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. Great Wall Enterprise | Standard Foods vs. Ruentex Development Co | Standard Foods vs. WiseChip Semiconductor |
Taiwan Tea vs. Far Eastern Department | Taiwan Tea vs. BES Engineering Co | Taiwan Tea vs. Ton Yi Industrial | Taiwan Tea vs. Evergreen International Storage |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |