Correlation Between TYC Brother and Chien Shing
Can any of the company-specific risk be diversified away by investing in both TYC Brother and Chien Shing 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 TYC Brother and Chien Shing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TYC Brother Industrial and Chien Shing Stainless, you can compare the effects of market volatilities on TYC Brother and Chien Shing 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 TYC Brother with a short position of Chien Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of TYC Brother and Chien Shing.
Diversification Opportunities for TYC Brother and Chien Shing
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TYC and Chien is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding TYC Brother Industrial and Chien Shing Stainless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Shing Stainless and TYC Brother 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 TYC Brother Industrial are associated (or correlated) with Chien Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Shing Stainless has no effect on the direction of TYC Brother i.e., TYC Brother and Chien Shing go up and down completely randomly.
Pair Corralation between TYC Brother and Chien Shing
Assuming the 90 days trading horizon TYC Brother Industrial is expected to generate 0.94 times more return on investment than Chien Shing. However, TYC Brother Industrial is 1.07 times less risky than Chien Shing. It trades about 0.09 of its potential returns per unit of risk. Chien Shing Stainless is currently generating about 0.08 per unit of risk. If you would invest 2,965 in TYC Brother Industrial on September 1, 2024 and sell it today you would earn a total of 3,515 from holding TYC Brother Industrial or generate 118.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
TYC Brother Industrial vs. Chien Shing Stainless
Performance |
| Timeline |
| TYC Brother Industrial |
| Chien Shing Stainless |
TYC Brother and Chien Shing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TYC Brother and Chien Shing
The main advantage of trading using opposite TYC Brother and Chien Shing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TYC Brother position performs unexpectedly, Chien Shing 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 Chien Shing will offset losses from the drop in Chien Shing's long position.| TYC Brother vs. Tong Yang Industry | TYC Brother vs. Ta Yih Industrial | TYC Brother vs. Basso Industry Corp | TYC Brother vs. China Motor Corp |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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