Correlation Between TongFu Microelectronics and Jiangsu Jiejie
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By analyzing existing cross correlation between TongFu Microelectronics Co and Jiangsu Jiejie Microelectronics, you can compare the effects of market volatilities on TongFu Microelectronics and Jiangsu Jiejie 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 Jiangsu Jiejie. Check out your portfolio center. Please also check ongoing floating volatility patterns of TongFu Microelectronics and Jiangsu Jiejie.
Diversification Opportunities for TongFu Microelectronics and Jiangsu Jiejie
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TongFu and Jiangsu is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding TongFu Microelectronics Co and Jiangsu Jiejie Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Jiejie Micro 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 Jiangsu Jiejie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Jiejie Micro has no effect on the direction of TongFu Microelectronics i.e., TongFu Microelectronics and Jiangsu Jiejie go up and down completely randomly.
Pair Corralation between TongFu Microelectronics and Jiangsu Jiejie
Assuming the 90 days trading horizon TongFu Microelectronics Co is expected to generate 0.94 times more return on investment than Jiangsu Jiejie. However, TongFu Microelectronics Co is 1.07 times less risky than Jiangsu Jiejie. It trades about 0.22 of its potential returns per unit of risk. Jiangsu Jiejie Microelectronics is currently generating about 0.19 per unit of risk. If you would invest 2,619 in TongFu Microelectronics Co on November 4, 2024 and sell it today you would earn a total of 211.00 from holding TongFu Microelectronics Co or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TongFu Microelectronics Co vs. Jiangsu Jiejie Microelectronic
Performance |
| Timeline |
| TongFu Microelectronics |
| Jiangsu Jiejie Micro |
TongFu Microelectronics and Jiangsu Jiejie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TongFu Microelectronics and Jiangsu Jiejie
The main advantage of trading using opposite TongFu Microelectronics and Jiangsu Jiejie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TongFu Microelectronics position performs unexpectedly, Jiangsu Jiejie 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 Jiangsu Jiejie will offset losses from the drop in Jiangsu Jiejie's long position.The idea behind TongFu Microelectronics Co and Jiangsu Jiejie Microelectronics 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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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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