Correlation Between Excelsior Medical and Taiwan Chinsan

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

By analyzing existing cross correlation between Excelsior Medical Co and Taiwan Chinsan Electronic, you can compare the effects of market volatilities on Excelsior Medical and Taiwan Chinsan 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 Excelsior Medical with a short position of Taiwan Chinsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelsior Medical and Taiwan Chinsan.

Diversification Opportunities for Excelsior Medical and Taiwan Chinsan

0.48

Correlation Coefficient

Excelsior Medical  Taiwan Chinsan

Very weak diversification

The 3 months correlation between Excelsior and Taiwan is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and Taiwan Chinsan Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Chinsan Electronic and Excelsior Medical 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 Excelsior Medical Co are associated (or correlated) with Taiwan Chinsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Chinsan Electronic has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and Taiwan Chinsan go up and down completely randomly.

Pair Corralation between Excelsior Medical and Taiwan Chinsan

Assuming the 90 days trading horizon Excelsior Medical Co is expected to generate 0.1 times more return on investment than Taiwan Chinsan. However, Excelsior Medical Co is 9.73 times less risky than Taiwan Chinsan. It trades about 0.04 of its potential returns per unit of risk. Taiwan Chinsan Electronic is currently generating about -0.16 per unit of risk. If you would invest  8,710  in Excelsior Medical Co on December 4, 2024 and sell it today you would earn a total of  70.00  from holding Excelsior Medical Co or generate 0.8% return on investment over 90 days.

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

Excelsior Medical Co  vs.  Taiwan Chinsan Electronic

Excelsior Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Excelsior Medical Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Excelsior Medical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Taiwan Chinsan Electronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taiwan Chinsan Electronic 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 Excelsior Medical and Taiwan Chinsan

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

The idea behind Excelsior Medical Co and Taiwan Chinsan Electronic 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.