Correlation Between Taishin Financial and Sunfar Computer

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

Diversification Opportunities for Taishin Financial and Sunfar Computer

0.12

Correlation Coefficient

Taishin Financial  Sunfar Computer

Average diversification

The 3 months correlation between Taishin and Sunfar is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Taishin Financial Holding and Sunfar Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfar Computer 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 Sunfar Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfar Computer has no effect on the direction of Taishin Financial i.e., Taishin Financial and Sunfar Computer go up and down completely randomly.

Pair Corralation between Taishin Financial and Sunfar Computer

Assuming the 90 days trading horizon Taishin Financial Holding is expected to generate 0.4 times more return on investment than Sunfar Computer. However, Taishin Financial Holding is 2.51 times less risky than Sunfar Computer. It trades about -0.01 of its potential returns per unit of risk. Sunfar Computer Co is currently generating about -0.05 per unit of risk. If you would invest  4,590  in Taishin Financial Holding on September 18, 2024 and sell it today you would lose (5.00) from holding Taishin Financial Holding or give up 0.11% of portfolio value over 90 days.

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

Taishin Financial Holding  vs.  Sunfar Computer Co

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.

Sunfar Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunfar Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunfar Computer 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 Sunfar Computer

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

The idea behind Taishin Financial Holding and Sunfar Computer Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.