Correlation Between Tainan Spinning and Tung Ho
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning 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 Tainan Spinning and Tung Ho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainan Spinning Co and Tung Ho Textile, you can compare the effects of market volatilities on Tainan Spinning 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 Tainan Spinning with a short position of Tung Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Tung Ho.
Diversification Opportunities for Tainan Spinning and Tung Ho
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tainan and Tung is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co 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 Tainan Spinning 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 Tainan Spinning Co 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 Tainan Spinning i.e., Tainan Spinning and Tung Ho go up and down completely randomly.
Pair Corralation between Tainan Spinning and Tung Ho
Assuming the 90 days trading horizon Tainan Spinning Co is expected to under-perform the Tung Ho. But the stock apears to be less risky and, when comparing its historical volatility, Tainan Spinning Co is 1.48 times less risky than Tung Ho. The stock trades about -0.1 of its potential returns per unit of risk. The Tung Ho Textile is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,180 in Tung Ho Textile on August 29, 2024 and sell it today you would earn a total of 105.00 from holding Tung Ho Textile or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Spinning Co vs. Tung Ho Textile
Performance |
| Timeline |
| Tainan Spinning |
| Tung Ho Textile |
Tainan Spinning and Tung Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Tung Ho
The main advantage of trading using opposite Tainan Spinning and Tung Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning 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.| Tainan Spinning vs. Yulon Finance Corp | Tainan Spinning vs. Taiwan Secom Co | Tainan Spinning vs. Pou Chen Corp | Tainan Spinning vs. Great Wall Enterprise |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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