Correlation Between Taisun Enterprise and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Taisun Enterprise and Tehmag Foods at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Taisun Enterprise and Tehmag Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taisun Enterprise Co and Tehmag Foods, you can compare the effects of market volatilities on Taisun Enterprise and Tehmag Foods 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 Taisun Enterprise with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taisun Enterprise and Tehmag Foods.
Diversification Opportunities for Taisun Enterprise and Tehmag Foods
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Taisun and Tehmag is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Taisun Enterprise Co and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and Taisun Enterprise 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 Taisun Enterprise Co are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Taisun Enterprise i.e., Taisun Enterprise and Tehmag Foods go up and down completely randomly.
Pair Corralation between Taisun Enterprise and Tehmag Foods
Assuming the 90 days trading horizon Taisun Enterprise Co is expected to under-perform the Tehmag Foods. In addition to that, Taisun Enterprise is 2.22 times more volatile than Tehmag Foods. It trades about -0.06 of its total potential returns per unit of risk. Tehmag Foods is currently generating about 0.08 per unit of volatility. If you would invest 24,964 in Tehmag Foods on October 25, 2024 and sell it today you would earn a total of 6,836 from holding Tehmag Foods or generate 27.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taisun Enterprise Co vs. Tehmag Foods
Performance |
| Timeline |
| Taisun Enterprise |
| Tehmag Foods |
Taisun Enterprise and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taisun Enterprise and Tehmag Foods
The main advantage of trading using opposite Taisun Enterprise and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taisun Enterprise position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.| Taisun Enterprise vs. AGV Products Corp | Taisun Enterprise vs. Wei Chuan Foods | Taisun Enterprise vs. Chia Hsin Cement | Taisun Enterprise vs. Grand Pacific Petrochemical |
| Tehmag Foods vs. Strong H Machinery | Tehmag Foods vs. Kao Fong Machinery | Tehmag Foods vs. Grand Ocean Retail | Tehmag Foods vs. Delpha Construction Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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