Correlation Between Ho Tung and Tex Ray
Can any of the company-specific risk be diversified away by investing in both Ho Tung and Tex Ray 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 Ho Tung and Tex Ray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ho Tung Chemical and Tex Ray Industrial Co, you can compare the effects of market volatilities on Ho Tung and Tex Ray 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 Ho Tung with a short position of Tex Ray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ho Tung and Tex Ray.
Diversification Opportunities for Ho Tung and Tex Ray
Very good diversification
The 3 months correlation between 1714 and Tex is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ho Tung Chemical and Tex Ray Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tex Ray Industrial and Ho Tung 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 Ho Tung Chemical are associated (or correlated) with Tex Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tex Ray Industrial has no effect on the direction of Ho Tung i.e., Ho Tung and Tex Ray go up and down completely randomly.
Pair Corralation between Ho Tung and Tex Ray
Assuming the 90 days trading horizon Ho Tung is expected to generate 2.45 times less return on investment than Tex Ray. But when comparing it to its historical volatility, Ho Tung Chemical is 2.04 times less risky than Tex Ray. It trades about 0.08 of its potential returns per unit of risk. Tex Ray Industrial Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,050 in Tex Ray Industrial Co on September 3, 2024 and sell it today you would earn a total of 30.00 from holding Tex Ray Industrial Co or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ho Tung Chemical vs. Tex Ray Industrial Co
Performance |
| Timeline |
| Ho Tung Chemical |
| Tex Ray Industrial |
Ho Tung and Tex Ray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ho Tung and Tex Ray
The main advantage of trading using opposite Ho Tung and Tex Ray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ho Tung position performs unexpectedly, Tex Ray 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 Tex Ray will offset losses from the drop in Tex Ray's long position.The idea behind Ho Tung Chemical and Tex Ray 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.| Tex Ray vs. Tainan Spinning Co | Tex Ray vs. Chia Her Industrial | Tex Ray vs. WiseChip Semiconductor | Tex Ray vs. Novatek Microelectronics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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