Correlation Between Taishin Financial and U Media

Can any of the company-specific risk be diversified away by investing in both Taishin Financial and U Media 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 U Media 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 U Media Communications, you can compare the effects of market volatilities on Taishin Financial and U Media 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 U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taishin Financial and U Media.

Diversification Opportunities for Taishin Financial and U Media

0.33

Correlation Coefficient

Taishin Financial  U Media

Weak diversification

The 3 months correlation between Taishin and 6470 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Taishin Financial Holding and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications 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 U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of Taishin Financial i.e., Taishin Financial and U Media go up and down completely randomly.

Pair Corralation between Taishin Financial and U Media

Assuming the 90 days trading horizon Taishin Financial is expected to generate 24.0 times less return on investment than U Media. But when comparing it to its historical volatility, Taishin Financial Holding is 6.11 times less risky than U Media. It trades about 0.0 of its potential returns per unit of risk. U Media Communications is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,254  in U Media Communications on October 11, 2024 and sell it today you would lose (184.00) from holding U Media Communications or give up 3.5% of portfolio value over 90 days.

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

Taishin Financial Holding  vs.  U Media Communications

Taishin Financial Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taishin Financial Holding are ranked lower than 3 (%) 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.

U Media Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in U Media Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, U Media 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 U Media

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

The idea behind Taishin Financial Holding and U Media Communications 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.