Correlation Between TongFu Microelectronics and Runjian Communication
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By analyzing existing cross correlation between TongFu Microelectronics Co and Runjian Communication Co, you can compare the effects of market volatilities on TongFu Microelectronics and Runjian Communication 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 TongFu Microelectronics with a short position of Runjian Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of TongFu Microelectronics and Runjian Communication.
Diversification Opportunities for TongFu Microelectronics and Runjian Communication
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TongFu and Runjian is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding TongFu Microelectronics Co and Runjian Communication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Runjian Communication and TongFu Microelectronics 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 TongFu Microelectronics Co are associated (or correlated) with Runjian Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Runjian Communication has no effect on the direction of TongFu Microelectronics i.e., TongFu Microelectronics and Runjian Communication go up and down completely randomly.
Pair Corralation between TongFu Microelectronics and Runjian Communication
Assuming the 90 days trading horizon TongFu Microelectronics Co is expected to under-perform the Runjian Communication. But the stock apears to be less risky and, when comparing its historical volatility, TongFu Microelectronics Co is 1.78 times less risky than Runjian Communication. The stock trades about -0.08 of its potential returns per unit of risk. The Runjian Communication Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,532 in Runjian Communication Co on November 30, 2024 and sell it today you would earn a total of 2,098 from holding Runjian Communication Co or generate 59.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TongFu Microelectronics Co vs. Runjian Communication Co
Performance |
| Timeline |
| TongFu Microelectronics |
| Runjian Communication |
TongFu Microelectronics and Runjian Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TongFu Microelectronics and Runjian Communication
The main advantage of trading using opposite TongFu Microelectronics and Runjian Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TongFu Microelectronics position performs unexpectedly, Runjian Communication 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 Runjian Communication will offset losses from the drop in Runjian Communication's long position.The idea behind TongFu Microelectronics Co and Runjian Communication Co 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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