Correlation Between Hung Chou and Tung Ho
Can any of the company-specific risk be diversified away by investing in both Hung Chou and Tung Ho 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 Hung Chou and Tung Ho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hung Chou Fiber and Tung Ho Textile, you can compare the effects of market volatilities on Hung Chou and Tung Ho 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 Hung Chou with a short position of Tung Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Chou and Tung Ho.
Diversification Opportunities for Hung Chou and Tung Ho
Very weak diversification
The 3 months correlation between Hung and Tung is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hung Chou Fiber and Tung Ho Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Ho Textile and Hung Chou 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 Hung Chou Fiber are associated (or correlated) with Tung Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Ho Textile has no effect on the direction of Hung Chou i.e., Hung Chou and Tung Ho go up and down completely randomly.
Pair Corralation between Hung Chou and Tung Ho
Assuming the 90 days trading horizon Hung Chou Fiber is expected to generate 0.54 times more return on investment than Tung Ho. However, Hung Chou Fiber is 1.84 times less risky than Tung Ho. It trades about 0.33 of its potential returns per unit of risk. Tung Ho Textile is currently generating about -0.22 per unit of risk. If you would invest 1,125 in Hung Chou Fiber on November 28, 2024 and sell it today you would earn a total of 60.00 from holding Hung Chou Fiber or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Chou Fiber vs. Tung Ho Textile
Performance |
| Timeline |
| Hung Chou Fiber |
| Tung Ho Textile |
Hung Chou and Tung Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Chou and Tung Ho
The main advantage of trading using opposite Hung Chou and Tung Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Chou position performs unexpectedly, Tung Ho 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 Tung Ho will offset losses from the drop in Tung Ho's long position.| Hung Chou vs. Huang Hsiang Construction | Hung Chou vs. Shieh Yih Machinery | Hung Chou vs. FDC International Hotels | Hung Chou vs. FarGlory Hotel Co |
| Tung Ho vs. Shinkong Synthetic Fiber | Tung Ho vs. Tainan Spinning Co | Tung Ho vs. Zig Sheng Industrial | Tung Ho vs. Lealea Enterprise Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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