Correlation Between Taita Chemical and Tang Eng
Can any of the company-specific risk be diversified away by investing in both Taita Chemical and Tang Eng 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 Taita Chemical and Tang Eng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taita Chemical Co and Tang Eng Iron, you can compare the effects of market volatilities on Taita Chemical and Tang Eng 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 Taita Chemical with a short position of Tang Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taita Chemical and Tang Eng.
Diversification Opportunities for Taita Chemical and Tang Eng
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taita and Tang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Taita Chemical Co and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron and Taita Chemical 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 Taita Chemical Co are associated (or correlated) with Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of Taita Chemical i.e., Taita Chemical and Tang Eng go up and down completely randomly.
Pair Corralation between Taita Chemical and Tang Eng
Assuming the 90 days trading horizon Taita Chemical Co is expected to generate 2.91 times more return on investment than Tang Eng. However, Taita Chemical is 2.91 times more volatile than Tang Eng Iron. It trades about 0.29 of its potential returns per unit of risk. Tang Eng Iron is currently generating about 0.26 per unit of risk. If you would invest 1,320 in Taita Chemical Co on November 28, 2024 and sell it today you would earn a total of 130.00 from holding Taita Chemical Co or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taita Chemical Co vs. Tang Eng Iron
Performance |
| Timeline |
| Taita Chemical |
| Tang Eng Iron |
Taita Chemical and Tang Eng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taita Chemical and Tang Eng
The main advantage of trading using opposite Taita Chemical and Tang Eng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taita Chemical position performs unexpectedly, Tang Eng 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 Tang Eng will offset losses from the drop in Tang Eng's long position.| Taita Chemical vs. China General Plastics | Taita Chemical vs. Asia Polymer Corp | Taita Chemical vs. USI Corp | Taita Chemical vs. Grand Pacific Petrochemical |
| Tang Eng vs. ANJI Technology Co | Tang Eng vs. Shian Yih Electronic | Tang Eng vs. Etrend Hightech | Tang Eng vs. PChome Online |
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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