Correlation Between Tehmag Foods and Transcend Information
Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and Transcend Information 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 Transcend Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tehmag Foods and Transcend Information, you can compare the effects of market volatilities on Tehmag Foods and Transcend Information 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 Transcend Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and Transcend Information.
Diversification Opportunities for Tehmag Foods and Transcend Information
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tehmag and Transcend is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and Transcend Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcend Information 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 Transcend Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcend Information has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and Transcend Information go up and down completely randomly.
Pair Corralation between Tehmag Foods and Transcend Information
Assuming the 90 days trading horizon Tehmag Foods is expected to generate 0.3 times more return on investment than Transcend Information. However, Tehmag Foods is 3.38 times less risky than Transcend Information. It trades about -0.19 of its potential returns per unit of risk. Transcend Information is currently generating about -0.1 per unit of risk. If you would invest 31,700 in Tehmag Foods on September 5, 2024 and sell it today you would lose (1,400) from holding Tehmag Foods or give up 4.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tehmag Foods vs. Transcend Information
Performance |
| Timeline |
| Tehmag Foods |
| Transcend Information |
Tehmag Foods and Transcend Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tehmag Foods and Transcend Information
The main advantage of trading using opposite Tehmag Foods and Transcend Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tehmag Foods position performs unexpectedly, Transcend Information 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 Transcend Information will offset losses from the drop in Transcend Information's long position.| Tehmag Foods vs. Uni President Enterprises Corp | Tehmag Foods vs. Lien Hwa Industrial | Tehmag Foods vs. Great Wall Enterprise | Tehmag Foods vs. Standard Foods Corp |
| Transcend Information vs. Taiwan Semiconductor Manufacturing | Transcend Information vs. Yang Ming Marine | Transcend Information vs. AU Optronics | Transcend Information vs. Nan Ya Plastics |
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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