Correlation Between GeoVision and Taiwan Shin

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

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

Diversification Opportunities for GeoVision and Taiwan Shin

0.49

Correlation Coefficient

GeoVision  Taiwan Shin

Very weak diversification

The 3 months correlation between GeoVision and Taiwan is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding GeoVision and Taiwan Shin Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Shin Kong and GeoVision 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 GeoVision are associated (or correlated) with Taiwan Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Shin Kong has no effect on the direction of GeoVision i.e., GeoVision and Taiwan Shin go up and down completely randomly.

Pair Corralation between GeoVision and Taiwan Shin

Assuming the 90 days trading horizon GeoVision is expected to under-perform the Taiwan Shin. In addition to that, GeoVision is 6.31 times more volatile than Taiwan Shin Kong. It trades about -0.04 of its total potential returns per unit of risk. Taiwan Shin Kong is currently generating about -0.07 per unit of volatility. If you would invest  4,180  in Taiwan Shin Kong on September 30, 2024 and sell it today you would lose (70.00) from holding Taiwan Shin Kong or give up 1.67% of portfolio value over 90 days.

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

GeoVision  vs.  Taiwan Shin Kong

GeoVision

Risk-Adjusted Performance

0 of 100

Very Weak

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

Taiwan Shin Kong

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Shin Kong has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiwan Shin 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 GeoVision and Taiwan Shin

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

The idea behind GeoVision and Taiwan Shin Kong 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.