Correlation Between Taishin Financial and King Chou

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

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

Diversification Opportunities for Taishin Financial and King Chou

0.05

Correlation Coefficient

Taishin Financial  King Chou

Significant diversification

The 3 months correlation between Taishin and King is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Taishin Financial Holding and King Chou Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Chou Marine and Taishin Financial 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 Taishin Financial Holding are associated (or correlated) with King Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Chou Marine has no effect on the direction of Taishin Financial i.e., Taishin Financial and King Chou go up and down completely randomly.

Pair Corralation between Taishin Financial and King Chou

Assuming the 90 days trading horizon Taishin Financial is expected to generate 12.41 times less return on investment than King Chou. But when comparing it to its historical volatility, Taishin Financial Holding is 3.76 times less risky than King Chou. It trades about 0.07 of its potential returns per unit of risk. King Chou Marine is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,945  in King Chou Marine on September 19, 2024 and sell it today you would earn a total of  205.00  from holding King Chou Marine or generate 5.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Taishin Financial Holding  vs.  King Chou Marine

Taishin Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taishin Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

King Chou Marine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in King Chou Marine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, King Chou 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 Taishin Financial and King Chou

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

The idea behind Taishin Financial Holding and King Chou Marine 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.