Correlation Between Tung Ho and I Hwa
Can any of the company-specific risk be diversified away by investing in both Tung Ho and I Hwa 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 I Hwa 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 I Hwa Industrial Co, you can compare the effects of market volatilities on Tung Ho and I Hwa 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 I Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Ho and I Hwa.
Diversification Opportunities for Tung Ho and I Hwa
Good diversification
The 3 months correlation between Tung and 1456 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tung Ho Textile and I Hwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Hwa Industrial 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 I Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Hwa Industrial has no effect on the direction of Tung Ho i.e., Tung Ho and I Hwa go up and down completely randomly.
Pair Corralation between Tung Ho and I Hwa
Assuming the 90 days trading horizon Tung Ho Textile is expected to generate 0.69 times more return on investment than I Hwa. However, Tung Ho Textile is 1.44 times less risky than I Hwa. It trades about 0.04 of its potential returns per unit of risk. I Hwa Industrial Co is currently generating about 0.02 per unit of risk. If you would invest 1,785 in Tung Ho Textile on August 29, 2024 and sell it today you would earn a total of 495.00 from holding Tung Ho Textile or generate 27.73% 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. I Hwa Industrial Co
Performance |
| Timeline |
| Tung Ho Textile |
| I Hwa Industrial |
Tung Ho and I Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Ho and I Hwa
The main advantage of trading using opposite Tung Ho and I Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Ho position performs unexpectedly, I Hwa 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 I Hwa will offset losses from the drop in I Hwa's long position.| Tung Ho vs. Taiwan Semiconductor Manufacturing | Tung Ho vs. Hon Hai Precision | Tung Ho vs. MediaTek | Tung Ho vs. Chunghwa Telecom Co |
| I Hwa vs. Taiwan Semiconductor Manufacturing | I Hwa vs. Hon Hai Precision | I Hwa vs. MediaTek | I Hwa vs. Chunghwa Telecom 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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