Correlation Between Ta Chen and Hsin Kuang
Can any of the company-specific risk be diversified away by investing in both Ta Chen and Hsin Kuang 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 Ta Chen and Hsin Kuang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ta Chen Stainless and Hsin Kuang Steel, you can compare the effects of market volatilities on Ta Chen and Hsin Kuang 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 Ta Chen with a short position of Hsin Kuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Chen and Hsin Kuang.
Diversification Opportunities for Ta Chen and Hsin Kuang
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2027 and Hsin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ta Chen Stainless and Hsin Kuang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsin Kuang Steel and Ta Chen 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 Ta Chen Stainless are associated (or correlated) with Hsin Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsin Kuang Steel has no effect on the direction of Ta Chen i.e., Ta Chen and Hsin Kuang go up and down completely randomly.
Pair Corralation between Ta Chen and Hsin Kuang
Assuming the 90 days trading horizon Ta Chen Stainless is expected to generate 1.36 times more return on investment than Hsin Kuang. However, Ta Chen is 1.36 times more volatile than Hsin Kuang Steel. It trades about 0.24 of its potential returns per unit of risk. Hsin Kuang Steel is currently generating about 0.05 per unit of risk. If you would invest 3,425 in Ta Chen Stainless on December 3, 2024 and sell it today you would earn a total of 1,435 from holding Ta Chen Stainless or generate 41.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Ta Chen Stainless vs. Hsin Kuang Steel
Performance |
Timeline |
Ta Chen Stainless |
Hsin Kuang Steel |
Ta Chen and Hsin Kuang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ta Chen and Hsin Kuang
The main advantage of trading using opposite Ta Chen and Hsin Kuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Chen position performs unexpectedly, Hsin Kuang 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 Hsin Kuang will offset losses from the drop in Hsin Kuang's long position.Ta Chen vs. Chung Hung Steel | Ta Chen vs. China Steel Corp | Ta Chen vs. Tung Ho Steel | Ta Chen vs. Yang Ming Marine |
Hsin Kuang vs. Chung Hung Steel | Hsin Kuang vs. Tung Ho Steel | Hsin Kuang vs. Ta Chen Stainless | Hsin Kuang vs. Feng Hsin Steel |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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