Correlation Between Tehmag Foods and Cheng Fwa
Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and Cheng Fwa 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 Cheng Fwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tehmag Foods and Cheng Fwa Industrial, you can compare the effects of market volatilities on Tehmag Foods and Cheng Fwa 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 Cheng Fwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and Cheng Fwa.
Diversification Opportunities for Tehmag Foods and Cheng Fwa
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tehmag and Cheng is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and Cheng Fwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Fwa Industrial 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 Cheng Fwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Fwa Industrial has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and Cheng Fwa go up and down completely randomly.
Pair Corralation between Tehmag Foods and Cheng Fwa
Assuming the 90 days trading horizon Tehmag Foods is expected to generate 0.17 times more return on investment than Cheng Fwa. However, Tehmag Foods is 5.77 times less risky than Cheng Fwa. It trades about 0.19 of its potential returns per unit of risk. Cheng Fwa Industrial is currently generating about -0.01 per unit of risk. If you would invest 30,400 in Tehmag Foods on October 7, 2024 and sell it today you would earn a total of 650.00 from holding Tehmag Foods or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tehmag Foods vs. Cheng Fwa Industrial
Performance |
| Timeline |
| Tehmag Foods |
| Cheng Fwa Industrial |
Tehmag Foods and Cheng Fwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tehmag Foods and Cheng Fwa
The main advantage of trading using opposite Tehmag Foods and Cheng Fwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tehmag Foods position performs unexpectedly, Cheng Fwa 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 Cheng Fwa will offset losses from the drop in Cheng Fwa's long position.| Tehmag Foods vs. Uni President Enterprises Corp | Tehmag Foods vs. Tingyi Holding Corp | Tehmag Foods vs. Lien Hwa Industrial | Tehmag Foods vs. Great Wall Enterprise |
| Cheng Fwa vs. Datavan International | Cheng Fwa vs. Information Technology Total | Cheng Fwa vs. K Way Information | Cheng Fwa vs. Evergreen International Storage |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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