Correlation Between Taiwan Closed and Korea Closed

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

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

Diversification Opportunities for Taiwan Closed and Korea Closed

-0.23

Correlation Coefficient

Taiwan Closed  Korea Closed

Very good diversification

The 3 months correlation between Taiwan and Korea is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Closed and Korea Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Closed and Taiwan 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 Taiwan Closed are associated (or correlated) with Korea Closed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Closed has no effect on the direction of Taiwan Closed i.e., Taiwan Closed and Korea Closed go up and down completely randomly.

Pair Corralation between Taiwan Closed and Korea Closed

Considering the 90-day investment horizon Taiwan Closed is expected to under-perform the Korea Closed. In addition to that, Taiwan Closed is 1.22 times more volatile than Korea Closed. It trades about -0.13 of its total potential returns per unit of risk. Korea Closed is currently generating about 0.15 per unit of volatility. If you would invest  1,886  in Korea Closed on December 26, 2024 and sell it today you would earn a total of  215.00  from holding Korea Closed or generate 11.4% return on investment over 90 days.

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

Taiwan Closed  vs.  Korea Closed

Taiwan Closed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taiwan Closed has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Korea Closed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Closed are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Korea Closed may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Taiwan Closed and Korea Closed

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

The idea behind Taiwan Closed and Korea 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.