Correlation Between Korea Closed and Taiwan Closed

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

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

Diversification Opportunities for Korea Closed and Taiwan Closed

-0.1

Correlation Coefficient

Korea Closed  Taiwan Closed

Good diversification

The 3 months correlation between Korea and Taiwan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Korea Closed and Taiwan Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Closed and Korea Closed 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 Korea Closed are associated (or correlated) with Taiwan Closed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Closed has no effect on the direction of Korea Closed i.e., Korea Closed and Taiwan Closed go up and down completely randomly.

Pair Corralation between Korea Closed and Taiwan Closed

Allowing for the 90-day total investment horizon Korea Closed is expected to under-perform the Taiwan Closed. In addition to that, Korea Closed is 1.02 times more volatile than Taiwan Closed. It trades about 0.0 of its total potential returns per unit of risk. Taiwan Closed is currently generating about 0.09 per unit of volatility. If you would invest  2,198  in Taiwan Closed on December 2, 2024 and sell it today you would earn a total of  1,526  from holding Taiwan Closed or generate 69.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Korea Closed  vs.  Taiwan Closed

Korea Closed

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Closed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable technical and fundamental indicators, Korea Closed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Taiwan Closed

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Closed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Taiwan Closed is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Korea Closed and Taiwan Closed

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

The idea behind Korea Closed and Taiwan Closed 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.