Correlation Between Taiwan Chinsan and Provision Information

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

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

Diversification Opportunities for Taiwan Chinsan and Provision Information

0.27

Correlation Coefficient

Taiwan Chinsan  Provision Information

Modest diversification

The 3 months correlation between Taiwan and Provision is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Chinsan Electronic and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information and Taiwan Chinsan 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 Taiwan Chinsan Electronic are associated (or correlated) with Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of Taiwan Chinsan i.e., Taiwan Chinsan and Provision Information go up and down completely randomly.

Pair Corralation between Taiwan Chinsan and Provision Information

Assuming the 90 days trading horizon Taiwan Chinsan is expected to generate 1.91 times less return on investment than Provision Information. But when comparing it to its historical volatility, Taiwan Chinsan Electronic is 1.43 times less risky than Provision Information. It trades about 0.03 of its potential returns per unit of risk. Provision Information CoLtd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,118  in Provision Information CoLtd on September 24, 2024 and sell it today you would earn a total of  2,362  from holding Provision Information CoLtd or generate 46.15% return on investment over 90 days.

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

Taiwan Chinsan Electronic  vs.  Provision Information CoLtd

Taiwan Chinsan Electronic

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Chinsan Electronic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Taiwan Chinsan showed solid returns over the last few months and may actually be approaching a breakup point.

Provision Information

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Provision Information CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Provision Information 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 Taiwan Chinsan and Provision Information

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

The idea behind Taiwan Chinsan Electronic and Provision Information CoLtd 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.