Correlation Between Tex Ray and Powertech Industrial
Can any of the company-specific risk be diversified away by investing in both Tex Ray and Powertech Industrial 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 Powertech Industrial 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 Powertech Industrial Co, you can compare the effects of market volatilities on Tex Ray and Powertech Industrial 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 Powertech Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tex Ray and Powertech Industrial.
Diversification Opportunities for Tex Ray and Powertech Industrial
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tex and Powertech is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tex Ray Industrial Co and Powertech Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertech Industrial 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 Powertech Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertech Industrial has no effect on the direction of Tex Ray i.e., Tex Ray and Powertech Industrial go up and down completely randomly.
Pair Corralation between Tex Ray and Powertech Industrial
Assuming the 90 days trading horizon Tex Ray is expected to generate 6.42 times less return on investment than Powertech Industrial. But when comparing it to its historical volatility, Tex Ray Industrial Co is 1.95 times less risky than Powertech Industrial. It trades about 0.06 of its potential returns per unit of risk. Powertech Industrial Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,650 in Powertech Industrial Co on August 30, 2024 and sell it today you would earn a total of 355.00 from holding Powertech Industrial Co or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tex Ray Industrial Co vs. Powertech Industrial Co
Performance |
| Timeline |
| Tex Ray Industrial |
| Powertech Industrial |
Tex Ray and Powertech Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tex Ray and Powertech Industrial
The main advantage of trading using opposite Tex Ray and Powertech Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tex Ray position performs unexpectedly, Powertech Industrial 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 Powertech Industrial will offset losses from the drop in Powertech Industrial's long position.The idea behind Tex Ray Industrial Co and Powertech Industrial Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Powertech Industrial vs. Yulon Motor Co | Powertech Industrial vs. Far Eastern Department | Powertech Industrial vs. China Steel Corp | Powertech Industrial vs. Chang Hwa Commercial |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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