Correlation Between Tigerair Taiwan and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both Tigerair Taiwan and Chung Hsin 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 Tigerair Taiwan and Chung Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tigerair Taiwan Co and Chung Hsin Electric Machinery, you can compare the effects of market volatilities on Tigerair Taiwan and Chung Hsin 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 Tigerair Taiwan with a short position of Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tigerair Taiwan and Chung Hsin.
Diversification Opportunities for Tigerair Taiwan and Chung Hsin
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tigerair and Chung is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tigerair Taiwan Co and Chung Hsin Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hsin Electric and Tigerair Taiwan 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 Tigerair Taiwan Co are associated (or correlated) with Chung Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hsin Electric has no effect on the direction of Tigerair Taiwan i.e., Tigerair Taiwan and Chung Hsin go up and down completely randomly.
Pair Corralation between Tigerair Taiwan and Chung Hsin
Assuming the 90 days trading horizon Tigerair Taiwan Co is expected to generate 1.67 times more return on investment than Chung Hsin. However, Tigerair Taiwan is 1.67 times more volatile than Chung Hsin Electric Machinery. It trades about 0.08 of its potential returns per unit of risk. Chung Hsin Electric Machinery is currently generating about -0.05 per unit of risk. If you would invest 6,580 in Tigerair Taiwan Co on September 15, 2024 and sell it today you would earn a total of 900.00 from holding Tigerair Taiwan Co or generate 13.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Tigerair Taiwan Co vs. Chung Hsin Electric Machinery
Performance |
Timeline |
Tigerair Taiwan |
Chung Hsin Electric |
Tigerair Taiwan and Chung Hsin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tigerair Taiwan and Chung Hsin
The main advantage of trading using opposite Tigerair Taiwan and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tigerair Taiwan position performs unexpectedly, Chung Hsin 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 Chung Hsin will offset losses from the drop in Chung Hsin's long position.Tigerair Taiwan vs. Taiwan Semiconductor Manufacturing | Tigerair Taiwan vs. Hon Hai Precision | Tigerair Taiwan vs. MediaTek | Tigerair Taiwan vs. Chunghwa Telecom Co |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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