Correlation Between TongFu Microelectronics and Inner Mongolia
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By analyzing existing cross correlation between TongFu Microelectronics Co and Inner Mongolia BaoTou, you can compare the effects of market volatilities on TongFu Microelectronics and Inner Mongolia 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 Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TongFu Microelectronics and Inner Mongolia.
Diversification Opportunities for TongFu Microelectronics and Inner Mongolia
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TongFu and Inner is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding TongFu Microelectronics Co and Inner Mongolia BaoTou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia BaoTou 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 Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia BaoTou has no effect on the direction of TongFu Microelectronics i.e., TongFu Microelectronics and Inner Mongolia go up and down completely randomly.
Pair Corralation between TongFu Microelectronics and Inner Mongolia
Assuming the 90 days trading horizon TongFu Microelectronics Co is expected to generate 1.34 times more return on investment than Inner Mongolia. However, TongFu Microelectronics is 1.34 times more volatile than Inner Mongolia BaoTou. It trades about 0.11 of its potential returns per unit of risk. Inner Mongolia BaoTou is currently generating about 0.05 per unit of risk. If you would invest 2,518 in TongFu Microelectronics Co on September 3, 2024 and sell it today you would earn a total of 481.00 from holding TongFu Microelectronics Co or generate 19.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TongFu Microelectronics Co vs. Inner Mongolia BaoTou
Performance |
| Timeline |
| TongFu Microelectronics |
| Inner Mongolia BaoTou |
TongFu Microelectronics and Inner Mongolia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TongFu Microelectronics and Inner Mongolia
The main advantage of trading using opposite TongFu Microelectronics and Inner Mongolia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TongFu Microelectronics position performs unexpectedly, Inner Mongolia 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 Inner Mongolia will offset losses from the drop in Inner Mongolia's long position.The idea behind TongFu Microelectronics Co and Inner Mongolia BaoTou 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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