The risk of the Taiwanese stocks in U.S. dollar terms must consider both the risk of the TWD and the correlation between the TWD and the Taiwanese stocks. The variance of these investments in U.S. dollar terms is: 0.202 + 0.152 + (2 × 0.20 × 0.15 × 0.4) = 0.0865. The standard deviation in U.S. dollar terms is then the square root of the variance: 0.08651/2 = 29.41%. The contribution of currency risk is then: 29.4% - 20.0% = 9.4%. Note that this is much less than the 15% that might otherwise be expected as being the risk of the TWD | 
