Correlation Between Taiwan Secom and Shuttle

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

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

Diversification Opportunities for Taiwan Secom and Shuttle

-0.32

Correlation Coefficient

Taiwan Secom  Shuttle

Very good diversification

The 3 months correlation between Taiwan and Shuttle is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Secom Co and Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shuttle and Taiwan Secom 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 Secom Co are associated (or correlated) with Shuttle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shuttle has no effect on the direction of Taiwan Secom i.e., Taiwan Secom and Shuttle go up and down completely randomly.

Pair Corralation between Taiwan Secom and Shuttle

Assuming the 90 days trading horizon Taiwan Secom Co is expected to under-perform the Shuttle. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Secom Co is 1.28 times less risky than Shuttle. The stock trades about -0.17 of its potential returns per unit of risk. The Shuttle is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,140  in Shuttle on October 6, 2024 and sell it today you would lose (65.00) from holding Shuttle or give up 3.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Taiwan Secom Co  vs.  Shuttle

Taiwan Secom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Secom Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Shuttle

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shuttle are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shuttle 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 Secom and Shuttle

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

The idea behind Taiwan Secom Co and Shuttle 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.