Correlation Between President Chain and Taiwan Glass

Can any of the company-specific risk be diversified away by investing in both President Chain and Taiwan Glass 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 President Chain and Taiwan Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between President Chain Store and Taiwan Glass Ind, you can compare the effects of market volatilities on President Chain and Taiwan Glass 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 President Chain with a short position of Taiwan Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Chain and Taiwan Glass.

Diversification Opportunities for President Chain and Taiwan Glass

0.78

Correlation Coefficient

President Chain  Taiwan Glass

Poor diversification

The 3 months correlation between President and Taiwan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding President Chain Store and Taiwan Glass Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Glass Ind and President Chain 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 President Chain Store are associated (or correlated) with Taiwan Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Glass Ind has no effect on the direction of President Chain i.e., President Chain and Taiwan Glass go up and down completely randomly.

Pair Corralation between President Chain and Taiwan Glass

Assuming the 90 days trading horizon President Chain Store is expected to generate 0.29 times more return on investment than Taiwan Glass. However, President Chain Store is 3.48 times less risky than Taiwan Glass. It trades about 0.12 of its potential returns per unit of risk. Taiwan Glass Ind is currently generating about 0.03 per unit of risk. If you would invest  25,800  in President Chain Store on December 1, 2024 and sell it today you would earn a total of  450.00  from holding President Chain Store or generate 1.74% return on investment over 90 days.

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

President Chain Store  vs.  Taiwan Glass Ind

President Chain Store

Risk-Adjusted Performance

Very Weak

Over the last 90 days President Chain Store has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, President Chain is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Taiwan Glass Ind

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taiwan Glass Ind has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with President Chain and Taiwan Glass

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

The idea behind President Chain Store and Taiwan Glass Ind 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.