Correlation Between Tehmag Foods and Trade Van
Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and Trade Van 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 Trade Van into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tehmag Foods and Trade Van Information Services, you can compare the effects of market volatilities on Tehmag Foods and Trade Van 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 Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and Trade Van.
Diversification Opportunities for Tehmag Foods and Trade Van
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tehmag and Trade is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van 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 Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and Trade Van go up and down completely randomly.
Pair Corralation between Tehmag Foods and Trade Van
Assuming the 90 days trading horizon Tehmag Foods is expected to under-perform the Trade Van. But the stock apears to be less risky and, when comparing its historical volatility, Tehmag Foods is 3.13 times less risky than Trade Van. The stock trades about -0.09 of its potential returns per unit of risk. The Trade Van Information Services is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,810 in Trade Van Information Services on August 31, 2024 and sell it today you would earn a total of 280.00 from holding Trade Van Information Services or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tehmag Foods vs. Trade Van Information Services
Performance |
| Timeline |
| Tehmag Foods |
| Trade Van Information |
Tehmag Foods and Trade Van Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tehmag Foods and Trade Van
The main advantage of trading using opposite Tehmag Foods and Trade Van positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tehmag Foods position performs unexpectedly, Trade Van 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 Trade Van will offset losses from the drop in Trade Van'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 |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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