Correlation Between Tainan Enterprises and Tah Hsin
Can any of the company-specific risk be diversified away by investing in both Tainan Enterprises and Tah Hsin 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 Enterprises and Tah Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainan Enterprises Co and Tah Hsin Industrial, you can compare the effects of market volatilities on Tainan Enterprises and Tah Hsin 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 Enterprises with a short position of Tah Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Enterprises and Tah Hsin.
Diversification Opportunities for Tainan Enterprises and Tah Hsin
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tainan and Tah is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Enterprises Co and Tah Hsin Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tah Hsin Industrial and Tainan Enterprises 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 Enterprises Co are associated (or correlated) with Tah Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tah Hsin Industrial has no effect on the direction of Tainan Enterprises i.e., Tainan Enterprises and Tah Hsin go up and down completely randomly.
Pair Corralation between Tainan Enterprises and Tah Hsin
Assuming the 90 days trading horizon Tainan Enterprises Co is expected to under-perform the Tah Hsin. In addition to that, Tainan Enterprises is 3.25 times more volatile than Tah Hsin Industrial. It trades about -0.26 of its total potential returns per unit of risk. Tah Hsin Industrial is currently generating about -0.05 per unit of volatility. If you would invest 7,060 in Tah Hsin Industrial on September 25, 2024 and sell it today you would lose (60.00) from holding Tah Hsin Industrial or give up 0.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tainan Enterprises Co vs. Tah Hsin Industrial
Performance |
Timeline |
Tainan Enterprises |
Tah Hsin Industrial |
Tainan Enterprises and Tah Hsin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tainan Enterprises and Tah Hsin
The main advantage of trading using opposite Tainan Enterprises and Tah Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Enterprises position performs unexpectedly, Tah Hsin 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 Tah Hsin will offset losses from the drop in Tah Hsin's long position.Tainan Enterprises vs. Merida Industry Co | Tainan Enterprises vs. Cheng Shin Rubber | Tainan Enterprises vs. Uni President Enterprises Corp | Tainan Enterprises vs. Pou Chen Corp |
Tah Hsin vs. Merida Industry Co | Tah Hsin vs. Cheng Shin Rubber | Tah Hsin vs. Uni President Enterprises Corp | Tah Hsin vs. Pou Chen Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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