Correlation Between TongFu Microelectronics and China Enterprise
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By analyzing existing cross correlation between TongFu Microelectronics Co and China Enterprise Co, you can compare the effects of market volatilities on TongFu Microelectronics and China Enterprise 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 China Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of TongFu Microelectronics and China Enterprise.
Diversification Opportunities for TongFu Microelectronics and China Enterprise
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TongFu and China is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding TongFu Microelectronics Co and China Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Enterprise 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 China Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Enterprise has no effect on the direction of TongFu Microelectronics i.e., TongFu Microelectronics and China Enterprise go up and down completely randomly.
Pair Corralation between TongFu Microelectronics and China Enterprise
Assuming the 90 days trading horizon TongFu Microelectronics Co is expected to generate 1.16 times more return on investment than China Enterprise. However, TongFu Microelectronics is 1.16 times more volatile than China Enterprise Co. It trades about 0.04 of its potential returns per unit of risk. China Enterprise Co is currently generating about 0.01 per unit of risk. If you would invest 1,851 in TongFu Microelectronics Co on October 16, 2024 and sell it today you would earn a total of 868.00 from holding TongFu Microelectronics Co or generate 46.89% 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. China Enterprise Co
Performance |
| Timeline |
| TongFu Microelectronics |
| China Enterprise |
TongFu Microelectronics and China Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TongFu Microelectronics and China Enterprise
The main advantage of trading using opposite TongFu Microelectronics and China Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TongFu Microelectronics position performs unexpectedly, China Enterprise 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 China Enterprise will offset losses from the drop in China Enterprise's long position.The idea behind TongFu Microelectronics Co and China Enterprise 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.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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