Correlation Between Tainan Spinning and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Hung Sheng 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 Hung Sheng 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 Hung Sheng Construction, you can compare the effects of market volatilities on Tainan Spinning and Hung Sheng 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 Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Hung Sheng.
Diversification Opportunities for Tainan Spinning and Hung Sheng
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tainan and Hung is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction 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 Hung Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Hung Sheng go up and down completely randomly.
Pair Corralation between Tainan Spinning and Hung Sheng
Assuming the 90 days trading horizon Tainan Spinning is expected to generate 41.83 times less return on investment than Hung Sheng. But when comparing it to its historical volatility, Tainan Spinning Co is 1.94 times less risky than Hung Sheng. It trades about 0.0 of its potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,615 in Hung Sheng Construction on September 1, 2024 and sell it today you would earn a total of 80.00 from holding Hung Sheng Construction or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tainan Spinning Co vs. Hung Sheng Construction
Performance |
| Timeline |
| Tainan Spinning |
| Hung Sheng Construction |
Tainan Spinning and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Hung Sheng
The main advantage of trading using opposite Tainan Spinning and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Hung Sheng 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 Hung Sheng will offset losses from the drop in Hung Sheng's long position.| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
| Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. CTCI Corp | Hung Sheng vs. Information Technology Total | Hung Sheng vs. Ennoconn Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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