Correlation Between Taiwan Navigation and Kinik

Can any of the company-specific risk be diversified away by investing in both Taiwan Navigation and Kinik 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 Navigation and Kinik into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taiwan Navigation Co and Kinik Co, you can compare the effects of market volatilities on Taiwan Navigation and Kinik 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 Navigation with a short position of Kinik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Navigation and Kinik.

Diversification Opportunities for Taiwan Navigation and Kinik

0.17

Correlation Coefficient

Taiwan Navigation  Kinik

Average diversification

The 3 months correlation between Taiwan and Kinik is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Navigation Co and Kinik Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinik and Taiwan Navigation 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 Navigation Co are associated (or correlated) with Kinik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinik has no effect on the direction of Taiwan Navigation i.e., Taiwan Navigation and Kinik go up and down completely randomly.

Pair Corralation between Taiwan Navigation and Kinik

Assuming the 90 days trading horizon Taiwan Navigation Co is expected to generate 0.46 times more return on investment than Kinik. However, Taiwan Navigation Co is 2.18 times less risky than Kinik. It trades about -0.03 of its potential returns per unit of risk. Kinik Co is currently generating about -0.03 per unit of risk. If you would invest  3,095  in Taiwan Navigation Co on September 13, 2024 and sell it today you would lose (70.00) from holding Taiwan Navigation Co or give up 2.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Taiwan Navigation Co  vs.  Kinik Co

Taiwan Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Navigation Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiwan Navigation is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kinik

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinik Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kinik is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Taiwan Navigation and Kinik

The main advantage of trading using opposite Taiwan Navigation and Kinik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Navigation position performs unexpectedly, Kinik 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 Kinik will offset losses from the drop in Kinik's long position.

The idea behind Taiwan Navigation Co and Kinik Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.