Correlation Between Tung Ho and Yuan High
Can any of the company-specific risk be diversified away by investing in both Tung Ho and Yuan High 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 Yuan High 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 Yuan High Tech Development, you can compare the effects of market volatilities on Tung Ho and Yuan High 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 Yuan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Ho and Yuan High.
Diversification Opportunities for Tung Ho and Yuan High
Excellent diversification
The 3 months correlation between Tung and Yuan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tung Ho Steel and Yuan High Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuan High Tech 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 Yuan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuan High Tech has no effect on the direction of Tung Ho i.e., Tung Ho and Yuan High go up and down completely randomly.
Pair Corralation between Tung Ho and Yuan High
Assuming the 90 days trading horizon Tung Ho Steel is expected to generate 0.28 times more return on investment than Yuan High. However, Tung Ho Steel is 3.56 times less risky than Yuan High. It trades about -0.02 of its potential returns per unit of risk. Yuan High Tech Development is currently generating about -0.13 per unit of risk. If you would invest 6,860 in Tung Ho Steel on October 31, 2024 and sell it today you would lose (40.00) from holding Tung Ho Steel or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tung Ho Steel vs. Yuan High Tech Development
Performance |
| Timeline |
| Tung Ho Steel |
| Yuan High Tech |
Tung Ho and Yuan High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Ho and Yuan High
The main advantage of trading using opposite Tung Ho and Yuan High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Ho position performs unexpectedly, Yuan High 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 Yuan High will offset losses from the drop in Yuan High'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 |
| Yuan High vs. Sun Sea Construction | Yuan High vs. TECO Electric Machinery | Yuan High vs. Strong H Machinery | Yuan High vs. Cowealth Medical Holding |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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