Correlation Between Great Computer and Tigerair Taiwan
Can any of the company-specific risk be diversified away by investing in both Great Computer and Tigerair Taiwan 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 Great Computer and Tigerair Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Computer and Tigerair Taiwan Co, you can compare the effects of market volatilities on Great Computer and Tigerair Taiwan 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 Great Computer with a short position of Tigerair Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Computer and Tigerair Taiwan.
Diversification Opportunities for Great Computer and Tigerair Taiwan
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great and Tigerair is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Great Computer and Tigerair Taiwan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigerair Taiwan and Great Computer 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 Great Computer are associated (or correlated) with Tigerair Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigerair Taiwan has no effect on the direction of Great Computer i.e., Great Computer and Tigerair Taiwan go up and down completely randomly.
Pair Corralation between Great Computer and Tigerair Taiwan
Assuming the 90 days trading horizon Great Computer is expected to generate 1.69 times less return on investment than Tigerair Taiwan. In addition to that, Great Computer is 1.6 times more volatile than Tigerair Taiwan Co. It trades about 0.08 of its total potential returns per unit of risk. Tigerair Taiwan Co is currently generating about 0.22 per unit of volatility. If you would invest 5,780 in Tigerair Taiwan Co on October 20, 2024 and sell it today you would earn a total of 2,900 from holding Tigerair Taiwan Co or generate 50.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Great Computer vs. Tigerair Taiwan Co
Performance |
Timeline |
Great Computer |
Tigerair Taiwan |
Great Computer and Tigerair Taiwan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Great Computer and Tigerair Taiwan
The main advantage of trading using opposite Great Computer and Tigerair Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Computer position performs unexpectedly, Tigerair Taiwan 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 Tigerair Taiwan will offset losses from the drop in Tigerair Taiwan's long position.Great Computer vs. Lihtai Construction Enterprise | Great Computer vs. Weltrend Semiconductor | Great Computer vs. Winstek Semiconductor Co | Great Computer vs. RDC Semiconductor 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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