Correlation Between Tung Ho and StShine Optical
Can any of the company-specific risk be diversified away by investing in both Tung Ho and StShine Optical 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 Tung Ho and StShine Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tung Ho Steel and StShine Optical Co, you can compare the effects of market volatilities on Tung Ho and StShine Optical 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 Tung Ho with a short position of StShine Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Ho and StShine Optical.
Diversification Opportunities for Tung Ho and StShine Optical
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tung and StShine is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tung Ho Steel and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical and Tung Ho 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 Tung Ho Steel are associated (or correlated) with StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of Tung Ho i.e., Tung Ho and StShine Optical go up and down completely randomly.
Pair Corralation between Tung Ho and StShine Optical
Assuming the 90 days trading horizon Tung Ho Steel is expected to under-perform the StShine Optical. But the stock apears to be less risky and, when comparing its historical volatility, Tung Ho Steel is 1.83 times less risky than StShine Optical. The stock trades about -0.12 of its potential returns per unit of risk. The StShine Optical Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 21,250 in StShine Optical Co on August 30, 2024 and sell it today you would earn a total of 1,200 from holding StShine Optical Co or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tung Ho Steel vs. StShine Optical Co
Performance |
| Timeline |
| Tung Ho Steel |
| StShine Optical |
Tung Ho and StShine Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Ho and StShine Optical
The main advantage of trading using opposite Tung Ho and StShine Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Ho position performs unexpectedly, StShine Optical 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 StShine Optical will offset losses from the drop in StShine Optical's long position.| Tung Ho vs. China Steel Corp | Tung Ho vs. Feng Hsin Steel | Tung Ho vs. Ta Chen Stainless | Tung Ho vs. Chung Hung Steel |
| StShine Optical vs. Chinese Maritime Transport | StShine Optical vs. Cleanaway Co | StShine Optical vs. Ambassador Hotel | StShine Optical vs. Tai Tung Communication |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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