Correlation Between Taiwan Chinsan and Kuo Toong
Can any of the company-specific risk be diversified away by investing in both Taiwan Chinsan and Kuo Toong 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 Kuo Toong 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 Kuo Toong International, you can compare the effects of market volatilities on Taiwan Chinsan and Kuo Toong 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 Kuo Toong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Chinsan and Kuo Toong.
Diversification Opportunities for Taiwan Chinsan and Kuo Toong
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taiwan and Kuo is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Chinsan Electronic and Kuo Toong International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuo Toong International 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 Kuo Toong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuo Toong International has no effect on the direction of Taiwan Chinsan i.e., Taiwan Chinsan and Kuo Toong go up and down completely randomly.
Pair Corralation between Taiwan Chinsan and Kuo Toong
Assuming the 90 days trading horizon Taiwan Chinsan is expected to generate 4.15 times less return on investment than Kuo Toong. But when comparing it to its historical volatility, Taiwan Chinsan Electronic is 1.66 times less risky than Kuo Toong. It trades about 0.03 of its potential returns per unit of risk. Kuo Toong International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,160 in Kuo Toong International on October 4, 2024 and sell it today you would earn a total of 2,695 from holding Kuo Toong International or generate 124.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Taiwan Chinsan Electronic vs. Kuo Toong International
Performance |
Timeline |
Taiwan Chinsan Electronic |
Kuo Toong International |
Taiwan Chinsan and Kuo Toong Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Taiwan Chinsan and Kuo Toong
The main advantage of trading using opposite Taiwan Chinsan and Kuo Toong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Chinsan position performs unexpectedly, Kuo Toong 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 Kuo Toong will offset losses from the drop in Kuo Toong's long position.Taiwan Chinsan vs. Intai Technology | Taiwan Chinsan vs. Central Reinsurance Corp | Taiwan Chinsan vs. Lian Hwa Foods | Taiwan Chinsan vs. Yuan High Tech Development |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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