Correlation Between Shenzhen Topway and Tongyu Communication
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By analyzing existing cross correlation between Shenzhen Topway Video and Tongyu Communication, you can compare the effects of market volatilities on Shenzhen Topway and Tongyu 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 Shenzhen Topway with a short position of Tongyu Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Topway and Tongyu Communication.
Diversification Opportunities for Shenzhen Topway and Tongyu Communication
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Tongyu is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Topway Video and Tongyu Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongyu Communication and Shenzhen Topway 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 Shenzhen Topway Video are associated (or correlated) with Tongyu Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongyu Communication has no effect on the direction of Shenzhen Topway i.e., Shenzhen Topway and Tongyu Communication go up and down completely randomly.
Pair Corralation between Shenzhen Topway and Tongyu Communication
Assuming the 90 days trading horizon Shenzhen Topway Video is expected to under-perform the Tongyu Communication. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Topway Video is 1.01 times less risky than Tongyu Communication. The stock trades about -0.53 of its potential returns per unit of risk. The Tongyu Communication is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 1,561 in Tongyu Communication on October 16, 2024 and sell it today you would lose (147.00) from holding Tongyu Communication or give up 9.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Topway Video vs. Tongyu Communication
Performance |
| Timeline |
| Shenzhen Topway Video |
| Tongyu Communication |
Shenzhen Topway and Tongyu Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Topway and Tongyu Communication
The main advantage of trading using opposite Shenzhen Topway and Tongyu Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Topway position performs unexpectedly, Tongyu 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 Tongyu Communication will offset losses from the drop in Tongyu Communication's long position.The idea behind Shenzhen Topway Video and Tongyu Communication 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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