Correlation Between Taisun Enterprise and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both Taisun Enterprise and Wei Chuan 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 Taisun Enterprise and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taisun Enterprise Co and Wei Chuan Foods, you can compare the effects of market volatilities on Taisun Enterprise and Wei Chuan 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 Taisun Enterprise with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taisun Enterprise and Wei Chuan.
Diversification Opportunities for Taisun Enterprise and Wei Chuan
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taisun and Wei is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Taisun Enterprise Co and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods and Taisun Enterprise 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 Taisun Enterprise Co are associated (or correlated) with Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of Taisun Enterprise i.e., Taisun Enterprise and Wei Chuan go up and down completely randomly.
Pair Corralation between Taisun Enterprise and Wei Chuan
Assuming the 90 days trading horizon Taisun Enterprise Co is expected to generate 1.58 times more return on investment than Wei Chuan. However, Taisun Enterprise is 1.58 times more volatile than Wei Chuan Foods. It trades about 0.07 of its potential returns per unit of risk. Wei Chuan Foods is currently generating about 0.06 per unit of risk. If you would invest 2,030 in Taisun Enterprise Co on September 6, 2024 and sell it today you would earn a total of 65.00 from holding Taisun Enterprise Co or generate 3.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.41% |
Values | Daily Returns |
Taisun Enterprise Co vs. Wei Chuan Foods
Performance |
Timeline |
Taisun Enterprise |
Wei Chuan Foods |
Taisun Enterprise and Wei Chuan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Taisun Enterprise and Wei Chuan
The main advantage of trading using opposite Taisun Enterprise and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taisun Enterprise position performs unexpectedly, Wei Chuan 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 Wei Chuan will offset losses from the drop in Wei Chuan's long position.Taisun Enterprise vs. AGV Products Corp | Taisun Enterprise vs. Wei Chuan Foods | Taisun Enterprise vs. Chia Hsin Cement | Taisun Enterprise vs. Grand Pacific Petrochemical |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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