Correlation Between Tehmag Foods and ECOVE Environment
Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and ECOVE Environment 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 ECOVE Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tehmag Foods and ECOVE Environment Corp, you can compare the effects of market volatilities on Tehmag Foods and ECOVE Environment 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 ECOVE Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and ECOVE Environment.
Diversification Opportunities for Tehmag Foods and ECOVE Environment
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tehmag and ECOVE is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and ECOVE Environment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECOVE Environment Corp 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 ECOVE Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECOVE Environment Corp has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and ECOVE Environment go up and down completely randomly.
Pair Corralation between Tehmag Foods and ECOVE Environment
Assuming the 90 days trading horizon Tehmag Foods is expected to generate 0.95 times more return on investment than ECOVE Environment. However, Tehmag Foods is 1.06 times less risky than ECOVE Environment. It trades about 0.04 of its potential returns per unit of risk. ECOVE Environment Corp is currently generating about -0.05 per unit of risk. If you would invest 29,644 in Tehmag Foods on August 28, 2024 and sell it today you would earn a total of 806.00 from holding Tehmag Foods or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tehmag Foods vs. ECOVE Environment Corp
Performance |
| Timeline |
| Tehmag Foods |
| ECOVE Environment Corp |
Tehmag Foods and ECOVE Environment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tehmag Foods and ECOVE Environment
The main advantage of trading using opposite Tehmag Foods and ECOVE Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tehmag Foods position performs unexpectedly, ECOVE Environment 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 ECOVE Environment will offset losses from the drop in ECOVE Environment'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 |
| ECOVE Environment vs. Cleanaway Co | ECOVE Environment vs. Taiwan Secom Co | ECOVE Environment vs. TTET Union Corp | ECOVE Environment vs. Tehmag Foods |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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