Correlation Between Taiwan Taffeta and Lan Fa
Can any of the company-specific risk be diversified away by investing in both Taiwan Taffeta and Lan Fa 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 Lan Fa 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 Lan Fa Textile, you can compare the effects of market volatilities on Taiwan Taffeta and Lan Fa 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 Lan Fa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Taffeta and Lan Fa.
Diversification Opportunities for Taiwan Taffeta and Lan Fa
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Lan is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Taffeta Fabric and Lan Fa Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lan Fa Textile 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 Lan Fa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lan Fa Textile has no effect on the direction of Taiwan Taffeta i.e., Taiwan Taffeta and Lan Fa go up and down completely randomly.
Pair Corralation between Taiwan Taffeta and Lan Fa
Assuming the 90 days trading horizon Taiwan Taffeta is expected to generate 10.05 times less return on investment than Lan Fa. But when comparing it to its historical volatility, Taiwan Taffeta Fabric is 4.79 times less risky than Lan Fa. It trades about 0.15 of its potential returns per unit of risk. Lan Fa Textile is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 924.00 in Lan Fa Textile on December 5, 2024 and sell it today you would earn a total of 316.00 from holding Lan Fa Textile or generate 34.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Taiwan Taffeta Fabric vs. Lan Fa Textile
Performance |
Timeline |
Taiwan Taffeta Fabric |
Lan Fa Textile |
Taiwan Taffeta and Lan Fa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Taiwan Taffeta and Lan Fa
The main advantage of trading using opposite Taiwan Taffeta and Lan Fa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Taffeta position performs unexpectedly, Lan Fa 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 Lan Fa will offset losses from the drop in Lan Fa's long position.Taiwan Taffeta vs. Wisher Industrial Co | Taiwan Taffeta vs. Lan Fa Textile | Taiwan Taffeta vs. Tah Tong Textile | Taiwan Taffeta vs. Honmyue Enterprise Co |
Lan Fa vs. Lealea Enterprise Co | Lan Fa vs. Li Peng Enterprise | Lan Fa vs. De Licacy Industrial | Lan Fa vs. Chyang Sheng Dyeing |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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