Correlation Between Taishin Financial and Chyang Sheng

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

By analyzing existing cross correlation between Taishin Financial Holding and Chyang Sheng Dyeing, you can compare the effects of market volatilities on Taishin Financial and Chyang Sheng 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 Taishin Financial with a short position of Chyang Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taishin Financial and Chyang Sheng.

Diversification Opportunities for Taishin Financial and Chyang Sheng

-0.05

Correlation Coefficient

Taishin Financial  Chyang Sheng

Good diversification

The 3 months correlation between Taishin and Chyang is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Taishin Financial Holding and Chyang Sheng Dyeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chyang Sheng Dyeing and Taishin Financial 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 Taishin Financial Holding are associated (or correlated) with Chyang Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chyang Sheng Dyeing has no effect on the direction of Taishin Financial i.e., Taishin Financial and Chyang Sheng go up and down completely randomly.

Pair Corralation between Taishin Financial and Chyang Sheng

Assuming the 90 days trading horizon Taishin Financial is expected to generate 69.52 times less return on investment than Chyang Sheng. But when comparing it to its historical volatility, Taishin Financial Holding is 4.52 times less risky than Chyang Sheng. It trades about 0.01 of its potential returns per unit of risk. Chyang Sheng Dyeing is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,750  in Chyang Sheng Dyeing on September 12, 2024 and sell it today you would earn a total of  740.00  from holding Chyang Sheng Dyeing or generate 42.29% return on investment over 90 days.

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

Taishin Financial Holding  vs.  Chyang Sheng Dyeing

Taishin Financial Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taishin Financial Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Taishin Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Chyang Sheng Dyeing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chyang Sheng Dyeing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chyang Sheng 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 Taishin Financial and Chyang Sheng

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

The idea behind Taishin Financial Holding and Chyang Sheng Dyeing 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.