Correlation Between Awea Mechantronic and Tong Tai
Can any of the company-specific risk be diversified away by investing in both Awea Mechantronic and Tong Tai 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 Awea Mechantronic and Tong Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Awea Mechantronic Co and Tong Tai Machine Tool, you can compare the effects of market volatilities on Awea Mechantronic and Tong Tai 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 Awea Mechantronic with a short position of Tong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awea Mechantronic and Tong Tai.
Diversification Opportunities for Awea Mechantronic and Tong Tai
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Awea and Tong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Awea Mechantronic Co and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine and Awea Mechantronic 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 Awea Mechantronic Co are associated (or correlated) with Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of Awea Mechantronic i.e., Awea Mechantronic and Tong Tai go up and down completely randomly.
Pair Corralation between Awea Mechantronic and Tong Tai
Assuming the 90 days trading horizon Awea Mechantronic Co is expected to under-perform the Tong Tai. But the stock apears to be less risky and, when comparing its historical volatility, Awea Mechantronic Co is 2.39 times less risky than Tong Tai. The stock trades about -0.01 of its potential returns per unit of risk. The Tong Tai Machine Tool is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,895 in Tong Tai Machine Tool on September 3, 2024 and sell it today you would earn a total of 1,280 from holding Tong Tai Machine Tool or generate 67.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Awea Mechantronic Co vs. Tong Tai Machine Tool
Performance |
| Timeline |
| Awea Mechantronic |
| Tong Tai Machine |
Awea Mechantronic and Tong Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Awea Mechantronic and Tong Tai
The main advantage of trading using opposite Awea Mechantronic and Tong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awea Mechantronic position performs unexpectedly, Tong Tai 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 Tong Tai will offset losses from the drop in Tong Tai's long position.| Awea Mechantronic vs. Anderson Industrial Corp | Awea Mechantronic vs. Kaulin Mfg | Awea Mechantronic vs. Roundtop Machinery Industries | Awea Mechantronic vs. Tong Tai Machine Tool |
| Tong Tai vs. Universal Microelectronics Co | Tong Tai vs. AVerMedia Technologies | Tong Tai vs. Symtek Automation Asia | Tong Tai vs. WiseChip Semiconductor |
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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