Correlation Between TongFu Microelectronics and Eastern Communications
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By analyzing existing cross correlation between TongFu Microelectronics Co and Eastern Communications Co, you can compare the effects of market volatilities on TongFu Microelectronics and Eastern Communications 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 Eastern Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of TongFu Microelectronics and Eastern Communications.
Diversification Opportunities for TongFu Microelectronics and Eastern Communications
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TongFu and Eastern is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TongFu Microelectronics Co and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications 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 Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of TongFu Microelectronics i.e., TongFu Microelectronics and Eastern Communications go up and down completely randomly.
Pair Corralation between TongFu Microelectronics and Eastern Communications
Assuming the 90 days trading horizon TongFu Microelectronics Co is expected to generate 2.4 times more return on investment than Eastern Communications. However, TongFu Microelectronics is 2.4 times more volatile than Eastern Communications Co. It trades about 0.21 of its potential returns per unit of risk. Eastern Communications Co is currently generating about 0.01 per unit of risk. If you would invest 2,329 in TongFu Microelectronics Co on August 25, 2024 and sell it today you would earn a total of 637.00 from holding TongFu Microelectronics Co or generate 27.35% 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. Eastern Communications Co
Performance |
| Timeline |
| TongFu Microelectronics |
| Eastern Communications |
TongFu Microelectronics and Eastern Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TongFu Microelectronics and Eastern Communications
The main advantage of trading using opposite TongFu Microelectronics and Eastern Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TongFu Microelectronics position performs unexpectedly, Eastern Communications 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 Eastern Communications will offset losses from the drop in Eastern Communications' long position.| TongFu Microelectronics vs. Lutian Machinery Co | TongFu Microelectronics vs. China Longyuan Power | TongFu Microelectronics vs. Changshu Tongrun Auto | TongFu Microelectronics vs. PetroChina Co Ltd |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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