Correlation Between Taiwan Navigation and Rexon Industrial

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

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

Diversification Opportunities for Taiwan Navigation and Rexon Industrial

0.93

Correlation Coefficient

Taiwan Navigation  Rexon Industrial

Almost no diversification

The 3 months correlation between Taiwan and Rexon is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Navigation Co and Rexon Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexon Industrial Corp and Taiwan Navigation 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 Taiwan Navigation Co are associated (or correlated) with Rexon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexon Industrial Corp has no effect on the direction of Taiwan Navigation i.e., Taiwan Navigation and Rexon Industrial go up and down completely randomly.

Pair Corralation between Taiwan Navigation and Rexon Industrial

Assuming the 90 days trading horizon Taiwan Navigation is expected to generate 1.65 times less return on investment than Rexon Industrial. But when comparing it to its historical volatility, Taiwan Navigation Co is 1.4 times less risky than Rexon Industrial. It trades about 0.09 of its potential returns per unit of risk. Rexon Industrial Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,070  in Rexon Industrial Corp on December 29, 2024 and sell it today you would earn a total of  305.00  from holding Rexon Industrial Corp or generate 9.93% return on investment over 90 days.

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

Taiwan Navigation Co  vs.  Rexon Industrial Corp

Taiwan Navigation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Navigation Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Taiwan Navigation may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Rexon Industrial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rexon Industrial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Rexon Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Taiwan Navigation and Rexon Industrial

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

The idea behind Taiwan Navigation Co and Rexon Industrial Corp 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.