Correlation Between Tehmag Foods and Roundtop Machinery
Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and Roundtop Machinery 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 Tehmag Foods and Roundtop Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tehmag Foods and Roundtop Machinery Industries, you can compare the effects of market volatilities on Tehmag Foods and Roundtop Machinery 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 Tehmag Foods with a short position of Roundtop Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and Roundtop Machinery.
Diversification Opportunities for Tehmag Foods and Roundtop Machinery
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tehmag and Roundtop is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and Roundtop Machinery Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundtop Machinery and Tehmag Foods 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 Tehmag Foods are associated (or correlated) with Roundtop Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundtop Machinery has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and Roundtop Machinery go up and down completely randomly.
Pair Corralation between Tehmag Foods and Roundtop Machinery
Assuming the 90 days trading horizon Tehmag Foods is expected to generate 0.18 times more return on investment than Roundtop Machinery. However, Tehmag Foods is 5.48 times less risky than Roundtop Machinery. It trades about -0.09 of its potential returns per unit of risk. Roundtop Machinery Industries is currently generating about -0.11 per unit of risk. If you would invest 30,600 in Tehmag Foods on September 1, 2024 and sell it today you would lose (250.00) from holding Tehmag Foods or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tehmag Foods vs. Roundtop Machinery Industries
Performance |
| Timeline |
| Tehmag Foods |
| Roundtop Machinery |
Tehmag Foods and Roundtop Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tehmag Foods and Roundtop Machinery
The main advantage of trading using opposite Tehmag Foods and Roundtop Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tehmag Foods position performs unexpectedly, Roundtop Machinery 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 Roundtop Machinery will offset losses from the drop in Roundtop Machinery's long position.| Tehmag Foods vs. Yuanta Financial Holdings | Tehmag Foods vs. Fubon Financial Holding | Tehmag Foods vs. CHINA DEVELOPMENT FINANCIAL | Tehmag Foods vs. Advanced Wireless Semiconductor |
| Roundtop Machinery vs. BES Engineering Co | Roundtop Machinery vs. Continental Holdings Corp | Roundtop Machinery vs. Kee Tai Properties | Roundtop Machinery vs. Hung Sheng Construction |
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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