Correlation Between Tong Hwa and Yageo Corp
Can any of the company-specific risk be diversified away by investing in both Tong Hwa and Yageo Corp 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 Tong Hwa and Yageo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tong Hwa Synthetic Fiber and Yageo Corp, you can compare the effects of market volatilities on Tong Hwa and Yageo Corp 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 Tong Hwa with a short position of Yageo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Hwa and Yageo Corp.
Diversification Opportunities for Tong Hwa and Yageo Corp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tong and Yageo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hwa Synthetic Fiber and Yageo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yageo Corp and Tong Hwa 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 Tong Hwa Synthetic Fiber are associated (or correlated) with Yageo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yageo Corp has no effect on the direction of Tong Hwa i.e., Tong Hwa and Yageo Corp go up and down completely randomly.
Pair Corralation between Tong Hwa and Yageo Corp
Assuming the 90 days trading horizon Tong Hwa Synthetic Fiber is expected to under-perform the Yageo Corp. But the stock apears to be less risky and, when comparing its historical volatility, Tong Hwa Synthetic Fiber is 1.44 times less risky than Yageo Corp. The stock trades about -0.08 of its potential returns per unit of risk. The Yageo Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 52,900 in Yageo Corp on October 25, 2024 and sell it today you would earn a total of 800.00 from holding Yageo Corp or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tong Hwa Synthetic Fiber vs. Yageo Corp
Performance |
| Timeline |
| Tong Hwa Synthetic |
| Yageo Corp |
Tong Hwa and Yageo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Hwa and Yageo Corp
The main advantage of trading using opposite Tong Hwa and Yageo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Hwa position performs unexpectedly, Yageo Corp 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 Yageo Corp will offset losses from the drop in Yageo Corp's long position.| Tong Hwa vs. Shinkong Synthetic Fiber | Tong Hwa vs. Nan Yang Dyeing | Tong Hwa vs. Tung Ho Textile | Tong Hwa vs. Tah Tong Textile |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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