Correlation Between Kedge Construction and Taiwan Navigation

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

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

Diversification Opportunities for Kedge Construction and Taiwan Navigation

0.06

Correlation Coefficient

Kedge Construction  Taiwan Navigation

Significant diversification

The 3 months correlation between Kedge and Taiwan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kedge Construction Co and Taiwan Navigation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Navigation and Kedge Construction 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 Kedge Construction Co are associated (or correlated) with Taiwan Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Navigation has no effect on the direction of Kedge Construction i.e., Kedge Construction and Taiwan Navigation go up and down completely randomly.

Pair Corralation between Kedge Construction and Taiwan Navigation

Assuming the 90 days trading horizon Kedge Construction Co is expected to under-perform the Taiwan Navigation. But the stock apears to be less risky and, when comparing its historical volatility, Kedge Construction Co is 1.08 times less risky than Taiwan Navigation. The stock trades about -0.1 of its potential returns per unit of risk. The Taiwan Navigation Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,100  in Taiwan Navigation Co on September 15, 2024 and sell it today you would lose (110.00) from holding Taiwan Navigation Co or give up 3.55% of portfolio value over 90 days.

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

Kedge Construction Co  vs.  Taiwan Navigation Co

Kedge Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kedge Construction Co 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 Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Navigation Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiwan Navigation 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 Kedge Construction and Taiwan Navigation

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

The idea behind Kedge Construction Co and Taiwan Navigation Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.