Correlation Between Tex Ray and TOPBI International
Can any of the company-specific risk be diversified away by investing in both Tex Ray and TOPBI International 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 Tex Ray and TOPBI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tex Ray Industrial Co and TOPBI International Holdings, you can compare the effects of market volatilities on Tex Ray and TOPBI International 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 Tex Ray with a short position of TOPBI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tex Ray and TOPBI International.
Diversification Opportunities for Tex Ray and TOPBI International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tex and TOPBI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tex Ray Industrial Co and TOPBI International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPBI International and Tex Ray 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 Tex Ray Industrial Co are associated (or correlated) with TOPBI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPBI International has no effect on the direction of Tex Ray i.e., Tex Ray and TOPBI International go up and down completely randomly.
Pair Corralation between Tex Ray and TOPBI International
Assuming the 90 days trading horizon Tex Ray is expected to generate 2.36 times less return on investment than TOPBI International. But when comparing it to its historical volatility, Tex Ray Industrial Co is 3.04 times less risky than TOPBI International. It trades about 0.21 of its potential returns per unit of risk. TOPBI International Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,205 in TOPBI International Holdings on August 28, 2024 and sell it today you would earn a total of 150.00 from holding TOPBI International Holdings or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tex Ray Industrial Co vs. TOPBI International Holdings
Performance |
| Timeline |
| Tex Ray Industrial |
| TOPBI International |
Tex Ray and TOPBI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tex Ray and TOPBI International
The main advantage of trading using opposite Tex Ray and TOPBI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tex Ray position performs unexpectedly, TOPBI International 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 TOPBI International will offset losses from the drop in TOPBI International's long position.| Tex Ray vs. Taiwan Semiconductor Manufacturing | Tex Ray vs. Hon Hai Precision | Tex Ray vs. MediaTek | Tex Ray vs. Chunghwa Telecom Co |
| TOPBI International vs. Makalot Industrial Co | TOPBI International vs. Shinkong Textile Co | TOPBI International vs. Tah Hsin Industrial | TOPBI International vs. Tainan Enterprises 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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