Correlation Between Taisun Enterprise and Tingyi Holding
Can any of the company-specific risk be diversified away by investing in both Taisun Enterprise and Tingyi Holding 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 Tingyi Holding 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 Tingyi Holding Corp, you can compare the effects of market volatilities on Taisun Enterprise and Tingyi Holding 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 Tingyi Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taisun Enterprise and Tingyi Holding.
Diversification Opportunities for Taisun Enterprise and Tingyi Holding
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taisun and Tingyi is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Taisun Enterprise Co and Tingyi Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tingyi Holding Corp 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 Tingyi Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tingyi Holding Corp has no effect on the direction of Taisun Enterprise i.e., Taisun Enterprise and Tingyi Holding go up and down completely randomly.
Pair Corralation between Taisun Enterprise and Tingyi Holding
Assuming the 90 days trading horizon Taisun Enterprise is expected to generate 26.94 times less return on investment than Tingyi Holding. But when comparing it to its historical volatility, Taisun Enterprise Co is 3.52 times less risky than Tingyi Holding. It trades about 0.05 of its potential returns per unit of risk. Tingyi Holding Corp is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,085 in Tingyi Holding Corp on November 4, 2024 and sell it today you would earn a total of 325.00 from holding Tingyi Holding Corp or generate 15.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taisun Enterprise Co vs. Tingyi Holding Corp
Performance |
| Timeline |
| Taisun Enterprise |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tingyi Holding Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Taisun Enterprise and Tingyi Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taisun Enterprise and Tingyi Holding
The main advantage of trading using opposite Taisun Enterprise and Tingyi Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taisun Enterprise position performs unexpectedly, Tingyi Holding 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 Tingyi Holding will offset losses from the drop in Tingyi Holding's long position.The idea behind Taisun Enterprise Co and Tingyi Holding Corp 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.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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