Correlation Between Sampo Corp and Taiwan Sanyo

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

By analyzing existing cross correlation between Sampo Corp and Taiwan Sanyo Electric, you can compare the effects of market volatilities on Sampo Corp and Taiwan Sanyo 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 Sampo Corp with a short position of Taiwan Sanyo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sampo Corp and Taiwan Sanyo.

Diversification Opportunities for Sampo Corp and Taiwan Sanyo

0.79

Correlation Coefficient

Sampo Corp  Taiwan Sanyo

Poor diversification

The 3 months correlation between Sampo and Taiwan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sampo Corp and Taiwan Sanyo Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sanyo Electric and Sampo Corp 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 Sampo Corp are associated (or correlated) with Taiwan Sanyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sanyo Electric has no effect on the direction of Sampo Corp i.e., Sampo Corp and Taiwan Sanyo go up and down completely randomly.

Pair Corralation between Sampo Corp and Taiwan Sanyo

Assuming the 90 days trading horizon Sampo Corp is expected to generate 2.65 times less return on investment than Taiwan Sanyo. But when comparing it to its historical volatility, Sampo Corp is 2.35 times less risky than Taiwan Sanyo. It trades about 0.24 of its potential returns per unit of risk. Taiwan Sanyo Electric is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  3,820  in Taiwan Sanyo Electric on December 5, 2024 and sell it today you would earn a total of  145.00  from holding Taiwan Sanyo Electric or generate 3.8% return on investment over 90 days.

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

Sampo Corp  vs.  Taiwan Sanyo Electric

Sampo Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sampo Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sampo Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Taiwan Sanyo Electric

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Sanyo Electric are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Taiwan Sanyo 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 Sampo Corp and Taiwan Sanyo

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

The idea behind Sampo Corp and Taiwan Sanyo Electric 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.