Correlation Between Taiwan Taffeta and Yi Jinn

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

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

Diversification Opportunities for Taiwan Taffeta and Yi Jinn

0.44

Correlation Coefficient

Taiwan Taffeta  Yi Jinn

Very weak diversification

The 3 months correlation between Taiwan and 1457 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Taffeta Fabric and Yi Jinn Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yi Jinn Industrial and Taiwan Taffeta 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 Taiwan Taffeta Fabric are associated (or correlated) with Yi Jinn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yi Jinn Industrial has no effect on the direction of Taiwan Taffeta i.e., Taiwan Taffeta and Yi Jinn go up and down completely randomly.

Pair Corralation between Taiwan Taffeta and Yi Jinn

Assuming the 90 days trading horizon Taiwan Taffeta Fabric is expected to under-perform the Yi Jinn. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Taffeta Fabric is 1.11 times less risky than Yi Jinn. The stock trades about -0.17 of its potential returns per unit of risk. The Yi Jinn Industrial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,910  in Yi Jinn Industrial on September 15, 2024 and sell it today you would earn a total of  75.00  from holding Yi Jinn Industrial or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Taiwan Taffeta Fabric  vs.  Yi Jinn Industrial

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.

Yi Jinn Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Taiwan Taffeta Fabric and Yi Jinn Industrial 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.