Correlation Between Champion Building and Taiwan Glass

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

By analyzing existing cross correlation between Champion Building Materials and Taiwan Glass Ind, you can compare the effects of market volatilities on Champion Building and Taiwan Glass 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 Champion Building with a short position of Taiwan Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Building and Taiwan Glass.

Diversification Opportunities for Champion Building and Taiwan Glass

-0.55

Correlation Coefficient

Champion Building  Taiwan Glass

Excellent diversification

The 3 months correlation between Champion and Taiwan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Champion Building Materials and Taiwan Glass Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Glass Ind and Champion Building 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 Champion Building Materials are associated (or correlated) with Taiwan Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Glass Ind has no effect on the direction of Champion Building i.e., Champion Building and Taiwan Glass go up and down completely randomly.

Pair Corralation between Champion Building and Taiwan Glass

Assuming the 90 days trading horizon Champion Building Materials is expected to generate 1.05 times more return on investment than Taiwan Glass. However, Champion Building is 1.05 times more volatile than Taiwan Glass Ind. It trades about 0.02 of its potential returns per unit of risk. Taiwan Glass Ind is currently generating about -0.01 per unit of risk. If you would invest  895.00  in Champion Building Materials on September 20, 2024 and sell it today you would earn a total of  125.00  from holding Champion Building Materials or generate 13.97% return on investment over 90 days.

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

Champion Building Materials  vs.  Taiwan Glass Ind

Champion Building

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Building Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Taiwan Glass Ind

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Glass Ind are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Taiwan Glass may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Champion Building and Taiwan Glass

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

The idea behind Champion Building Materials and Taiwan Glass Ind 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.