Correlation Between Taishin Financial and GCS Holdings

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

Diversification Opportunities for Taishin Financial and GCS Holdings

-0.43

Correlation Coefficient

Taishin Financial  GCS Holdings

Very good diversification

The 3 months correlation between Taishin and GCS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Taishin Financial Holding and GCS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCS Holdings 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 GCS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCS Holdings has no effect on the direction of Taishin Financial i.e., Taishin Financial and GCS Holdings go up and down completely randomly.

Pair Corralation between Taishin Financial and GCS Holdings

Assuming the 90 days trading horizon Taishin Financial is expected to generate 49.72 times less return on investment than GCS Holdings. But when comparing it to its historical volatility, Taishin Financial Holding is 28.56 times less risky than GCS Holdings. It trades about 0.17 of its potential returns per unit of risk. GCS Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  9,720  in GCS Holdings on September 30, 2024 and sell it today you would earn a total of  3,980  from holding GCS Holdings or generate 40.95% return on investment over 90 days.

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

Taishin Financial Holding  vs.  GCS Holdings

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.

GCS Holdings

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GCS Holdings are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, GCS Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taishin Financial and GCS Holdings

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

The idea behind Taishin Financial Holding and GCS Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.