Correlation Between First Insurance and Taiwan Mobile
Can any of the company-specific risk be diversified away by investing in both First Insurance and Taiwan Mobile 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 First Insurance and Taiwan Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Insurance Co and Taiwan Mobile Co, you can compare the effects of market volatilities on First Insurance and Taiwan Mobile 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 First Insurance with a short position of Taiwan Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Taiwan Mobile.
Diversification Opportunities for First Insurance and Taiwan Mobile
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Taiwan is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co and Taiwan Mobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Mobile and First Insurance 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 First Insurance Co are associated (or correlated) with Taiwan Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Mobile has no effect on the direction of First Insurance i.e., First Insurance and Taiwan Mobile go up and down completely randomly.
Pair Corralation between First Insurance and Taiwan Mobile
Assuming the 90 days trading horizon First Insurance Co is expected to under-perform the Taiwan Mobile. But the stock apears to be less risky and, when comparing its historical volatility, First Insurance Co is 1.29 times less risky than Taiwan Mobile. The stock trades about -0.07 of its potential returns per unit of risk. The Taiwan Mobile Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,500 in Taiwan Mobile Co on September 24, 2024 and sell it today you would earn a total of 50.00 from holding Taiwan Mobile Co or generate 0.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
First Insurance Co vs. Taiwan Mobile Co
Performance |
Timeline |
First Insurance |
Taiwan Mobile |
First Insurance and Taiwan Mobile Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Insurance and Taiwan Mobile
The main advantage of trading using opposite First Insurance and Taiwan Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance position performs unexpectedly, Taiwan Mobile 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 Mobile will offset losses from the drop in Taiwan Mobile's long position.First Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Taiwan Business Bank |
Taiwan Mobile vs. China Steel Corp | Taiwan Mobile vs. Formosa Plastics Corp | Taiwan Mobile vs. Cathay Financial Holding | Taiwan Mobile vs. Fubon Financial Holding |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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