Correlation Between Shin Kong and Taiwan Semiconductor
Can any of the company-specific risk be diversified away by investing in both Shin Kong and Taiwan Semiconductor 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 Shin Kong and Taiwan Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Kong Financial and Taiwan Semiconductor Manufacturing, you can compare the effects of market volatilities on Shin Kong and Taiwan Semiconductor 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 Shin Kong with a short position of Taiwan Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and Taiwan Semiconductor.
Diversification Opportunities for Shin Kong and Taiwan Semiconductor
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shin and Taiwan is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and Taiwan Semiconductor Manufactu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Semiconductor and Shin Kong 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 Shin Kong Financial are associated (or correlated) with Taiwan Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Semiconductor has no effect on the direction of Shin Kong i.e., Shin Kong and Taiwan Semiconductor go up and down completely randomly.
Pair Corralation between Shin Kong and Taiwan Semiconductor
Assuming the 90 days trading horizon Shin Kong Financial is expected to under-perform the Taiwan Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Shin Kong Financial is 2.47 times less risky than Taiwan Semiconductor. The stock trades about -0.08 of its potential returns per unit of risk. The Taiwan Semiconductor Manufacturing is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 102,606 in Taiwan Semiconductor Manufacturing on September 24, 2024 and sell it today you would earn a total of 5,394 from holding Taiwan Semiconductor Manufacturing or generate 5.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Shin Kong Financial vs. Taiwan Semiconductor Manufactu
Performance |
Timeline |
Shin Kong Financial |
Taiwan Semiconductor |
Shin Kong and Taiwan Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shin Kong and Taiwan Semiconductor
The main advantage of trading using opposite Shin Kong and Taiwan Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, Taiwan Semiconductor 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 Semiconductor will offset losses from the drop in Taiwan Semiconductor's long position.Shin Kong vs. Taiwan Semiconductor Manufacturing | Shin Kong vs. Hon Hai Precision | Shin Kong vs. MediaTek | Shin Kong vs. Chunghwa Telecom Co |
Taiwan Semiconductor vs. Century Wind Power | Taiwan Semiconductor vs. Green World Fintech | Taiwan Semiconductor vs. Ingentec | Taiwan Semiconductor vs. Chaheng Precision Co |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |