Correlation Between Tung Ho and Taiwan Weighted
Can any of the company-specific risk be diversified away by investing in both Tung Ho and Taiwan Weighted 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 Tung Ho and Taiwan Weighted into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tung Ho Steel and Taiwan Weighted, you can compare the effects of market volatilities on Tung Ho and Taiwan Weighted 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 Tung Ho with a short position of Taiwan Weighted. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Ho and Taiwan Weighted.
Diversification Opportunities for Tung Ho and Taiwan Weighted
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tung and Taiwan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tung Ho Steel and Taiwan Weighted in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Weighted and Tung Ho 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 Tung Ho Steel are associated (or correlated) with Taiwan Weighted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Weighted has no effect on the direction of Tung Ho i.e., Tung Ho and Taiwan Weighted go up and down completely randomly.
Pair Corralation between Tung Ho and Taiwan Weighted
Assuming the 90 days trading horizon Tung Ho is expected to generate 1.58 times less return on investment than Taiwan Weighted. In addition to that, Tung Ho is 1.18 times more volatile than Taiwan Weighted. It trades about 0.05 of its total potential returns per unit of risk. Taiwan Weighted is currently generating about 0.1 per unit of volatility. If you would invest 1,419,913 in Taiwan Weighted on September 25, 2024 and sell it today you would earn a total of 890,541 from holding Taiwan Weighted or generate 62.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.75% |
Values | Daily Returns |
Tung Ho Steel vs. Taiwan Weighted
Performance |
Timeline |
Tung Ho and Taiwan Weighted Volatility Contrast
Predicted Return Density |
Returns |
Tung Ho Steel
Pair trading matchups for Tung Ho
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Pair Trading with Tung Ho and Taiwan Weighted
The main advantage of trading using opposite Tung Ho and Taiwan Weighted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Ho position performs unexpectedly, Taiwan Weighted 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 Weighted will offset losses from the drop in Taiwan Weighted's long position.Tung Ho vs. Formosa Plastics Corp | Tung Ho vs. Formosa Chemicals Fibre | Tung Ho vs. China Steel Corp | Tung Ho vs. Formosa Petrochemical Corp |
Taiwan Weighted vs. V Tac Technology Co | Taiwan Weighted vs. Sitronix Technology Corp | Taiwan Weighted vs. Microtips Technology | Taiwan Weighted vs. Vate Technology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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