Correlation Between Tehmag Foods and Phison Electronics
Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and Phison Electronics 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 Phison Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tehmag Foods and Phison Electronics, you can compare the effects of market volatilities on Tehmag Foods and Phison Electronics 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 Phison Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and Phison Electronics.
Diversification Opportunities for Tehmag Foods and Phison Electronics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tehmag and Phison is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and Phison Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phison Electronics 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 Phison Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phison Electronics has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and Phison Electronics go up and down completely randomly.
Pair Corralation between Tehmag Foods and Phison Electronics
Assuming the 90 days trading horizon Tehmag Foods is expected to generate 0.15 times more return on investment than Phison Electronics. However, Tehmag Foods is 6.68 times less risky than Phison Electronics. It trades about -0.04 of its potential returns per unit of risk. Phison Electronics is currently generating about -0.07 per unit of risk. If you would invest 30,600 in Tehmag Foods on August 31, 2024 and sell it today you would lose (100.00) from holding Tehmag Foods or give up 0.33% 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. Phison Electronics
Performance |
| Timeline |
| Tehmag Foods |
| Phison Electronics |
Tehmag Foods and Phison Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tehmag Foods and Phison Electronics
The main advantage of trading using opposite Tehmag Foods and Phison Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tehmag Foods position performs unexpectedly, Phison Electronics 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 Phison Electronics will offset losses from the drop in Phison Electronics' 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 |
| Phison Electronics vs. Syscom Computer Engineering | Phison Electronics vs. Voltronic Power Technology | Phison Electronics vs. Tehmag Foods | Phison Electronics vs. Great Computer |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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