Correlation Between Tung Ho and Tainan Spinning
Can any of the company-specific risk be diversified away by investing in both Tung Ho and Tainan Spinning 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 Tainan Spinning 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 Tainan Spinning Co, you can compare the effects of market volatilities on Tung Ho and Tainan Spinning 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 Tainan Spinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Ho and Tainan Spinning.
Diversification Opportunities for Tung Ho and Tainan Spinning
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tung and Tainan is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Tung Ho Textile and Tainan Spinning Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Spinning 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 Tainan Spinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Spinning has no effect on the direction of Tung Ho i.e., Tung Ho and Tainan Spinning go up and down completely randomly.
Pair Corralation between Tung Ho and Tainan Spinning
Assuming the 90 days trading horizon Tung Ho Textile is expected to generate 1.32 times more return on investment than Tainan Spinning. However, Tung Ho is 1.32 times more volatile than Tainan Spinning Co. It trades about 0.06 of its potential returns per unit of risk. Tainan Spinning Co is currently generating about -0.13 per unit of risk. If you would invest 2,190 in Tung Ho Textile on August 25, 2024 and sell it today you would earn a total of 65.00 from holding Tung Ho Textile or generate 2.97% 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. Tainan Spinning Co
Performance |
| Timeline |
| Tung Ho Textile |
| Tainan Spinning |
Tung Ho and Tainan Spinning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Ho and Tainan Spinning
The main advantage of trading using opposite Tung Ho and Tainan Spinning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Ho position performs unexpectedly, Tainan Spinning 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 Tainan Spinning will offset losses from the drop in Tainan Spinning's 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 |
| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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