Correlation Between Li Peng and Taiwan Taffeta

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

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

Diversification Opportunities for Li Peng and Taiwan Taffeta

0.92

Correlation Coefficient

Li Peng  Taiwan Taffeta

Almost no diversification

The 3 months correlation between 1447 and Taiwan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Li Peng Enterprise and Taiwan Taffeta Fabric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Taffeta Fabric and Li Peng 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 Li Peng Enterprise are associated (or correlated) with Taiwan Taffeta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Taffeta Fabric has no effect on the direction of Li Peng i.e., Li Peng and Taiwan Taffeta go up and down completely randomly.

Pair Corralation between Li Peng and Taiwan Taffeta

Assuming the 90 days trading horizon Li Peng is expected to generate 9.42 times less return on investment than Taiwan Taffeta. But when comparing it to its historical volatility, Li Peng Enterprise is 1.01 times less risky than Taiwan Taffeta. It trades about 0.0 of its potential returns per unit of risk. Taiwan Taffeta Fabric is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,280  in Taiwan Taffeta Fabric on September 14, 2024 and sell it today you would earn a total of  315.00  from holding Taiwan Taffeta Fabric or generate 24.61% return on investment over 90 days.

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

Li Peng Enterprise  vs.  Taiwan Taffeta Fabric

Li Peng Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Li Peng Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Taiwan Taffeta Fabric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Taffeta Fabric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Li Peng and Taiwan Taffeta

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

The idea behind Li Peng Enterprise and Taiwan Taffeta Fabric 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..