Correlation Between Tung Ho and SanDi Properties
Can any of the company-specific risk be diversified away by investing in both Tung Ho and SanDi Properties 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 Tung Ho and SanDi Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tung Ho Textile and SanDi Properties Co, you can compare the effects of market volatilities on Tung Ho and SanDi Properties 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 Tung Ho with a short position of SanDi Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Ho and SanDi Properties.
Diversification Opportunities for Tung Ho and SanDi Properties
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tung and SanDi is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tung Ho Textile and SanDi Properties Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SanDi Properties and Tung Ho 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 Tung Ho Textile are associated (or correlated) with SanDi Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SanDi Properties has no effect on the direction of Tung Ho i.e., Tung Ho and SanDi Properties go up and down completely randomly.
Pair Corralation between Tung Ho and SanDi Properties
Assuming the 90 days trading horizon Tung Ho is expected to generate 2.43 times less return on investment than SanDi Properties. But when comparing it to its historical volatility, Tung Ho Textile is 1.41 times less risky than SanDi Properties. It trades about 0.05 of its potential returns per unit of risk. SanDi Properties Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,020 in SanDi Properties Co on August 29, 2024 and sell it today you would earn a total of 2,650 from holding SanDi Properties Co or generate 87.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tung Ho Textile vs. SanDi Properties Co
Performance |
| Timeline |
| Tung Ho Textile |
| SanDi Properties |
Tung Ho and SanDi Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Ho and SanDi Properties
The main advantage of trading using opposite Tung Ho and SanDi Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Ho position performs unexpectedly, SanDi Properties 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 SanDi Properties will offset losses from the drop in SanDi Properties' long position.| Tung Ho vs. Shinkong Synthetic Fiber | Tung Ho vs. Tainan Spinning Co | Tung Ho vs. Zig Sheng Industrial | Tung Ho vs. Lealea Enterprise Co |
| SanDi Properties vs. Advancetek Enterprise Co | SanDi Properties vs. I Hwa Industrial Co | SanDi Properties vs. Carnival Industrial Corp | SanDi Properties vs. Tung Ho Textile |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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