Correlation Between Tainan Spinning and Baolong International
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Baolong International 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 Tainan Spinning and Baolong International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainan Spinning Co and Baolong International Co, you can compare the effects of market volatilities on Tainan Spinning and Baolong International 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 Tainan Spinning with a short position of Baolong International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Baolong International.
Diversification Opportunities for Tainan Spinning and Baolong International
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tainan and Baolong is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Baolong International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baolong International and Tainan Spinning 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 Tainan Spinning Co are associated (or correlated) with Baolong International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baolong International has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Baolong International go up and down completely randomly.
Pair Corralation between Tainan Spinning and Baolong International
Assuming the 90 days trading horizon Tainan Spinning Co is expected to generate 1.54 times more return on investment than Baolong International. However, Tainan Spinning is 1.54 times more volatile than Baolong International Co. It trades about -0.01 of its potential returns per unit of risk. Baolong International Co is currently generating about -0.04 per unit of risk. If you would invest 1,680 in Tainan Spinning Co on September 20, 2024 and sell it today you would lose (225.00) from holding Tainan Spinning Co or give up 13.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.79% |
Values | Daily Returns |
Tainan Spinning Co vs. Baolong International Co
Performance |
Timeline |
Tainan Spinning |
Baolong International |
Tainan Spinning and Baolong International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tainan Spinning and Baolong International
The main advantage of trading using opposite Tainan Spinning and Baolong International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Baolong International 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 Baolong International will offset losses from the drop in Baolong International's long position.Tainan Spinning vs. Ruentex Development Co | Tainan Spinning vs. WiseChip Semiconductor | Tainan Spinning vs. Novatek Microelectronics Corp | Tainan Spinning vs. Leader Electronics |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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