Correlation Between Evergreen International and Taishin Financial

Can any of the company-specific risk be diversified away by investing in both Evergreen International and Taishin Financial 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 Evergreen International and Taishin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evergreen International Storage and Taishin Financial Holding, you can compare the effects of market volatilities on Evergreen International and Taishin Financial 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 Evergreen International with a short position of Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen International and Taishin Financial.

Diversification Opportunities for Evergreen International and Taishin Financial

-0.51

Correlation Coefficient

Evergreen International  Taishin Financial

Excellent diversification

The 3 months correlation between Evergreen and Taishin is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen International Storag and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding and Evergreen International 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 Evergreen International Storage are associated (or correlated) with Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Evergreen International i.e., Evergreen International and Taishin Financial go up and down completely randomly.

Pair Corralation between Evergreen International and Taishin Financial

Assuming the 90 days trading horizon Evergreen International Storage is expected to under-perform the Taishin Financial. In addition to that, Evergreen International is 4.21 times more volatile than Taishin Financial Holding. It trades about -0.03 of its total potential returns per unit of risk. Taishin Financial Holding is currently generating about 0.04 per unit of volatility. If you would invest  5,140  in Taishin Financial Holding on December 2, 2024 and sell it today you would earn a total of  20.00  from holding Taishin Financial Holding or generate 0.39% return on investment over 90 days.

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

Evergreen International Storag  vs.  Taishin Financial Holding

Evergreen International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evergreen International Storage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Evergreen International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Taishin Financial Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taishin Financial Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Taishin Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Evergreen International and Taishin Financial

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

The idea behind Evergreen International Storage and Taishin Financial Holding 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.