Correlation Between Ta Chen and Tung Ho
Can any of the company-specific risk be diversified away by investing in both Ta Chen and Tung Ho 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 Ta Chen and Tung Ho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ta Chen Stainless and Tung Ho Steel, you can compare the effects of market volatilities on Ta Chen and Tung Ho 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 Ta Chen with a short position of Tung Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Chen and Tung Ho.
Diversification Opportunities for Ta Chen and Tung Ho
Poor diversification
The 3 months correlation between 2027 and Tung is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ta Chen Stainless and Tung Ho Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Ho Steel and Ta Chen 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 Ta Chen Stainless are associated (or correlated) with Tung Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Ho Steel has no effect on the direction of Ta Chen i.e., Ta Chen and Tung Ho go up and down completely randomly.
Pair Corralation between Ta Chen and Tung Ho
Assuming the 90 days trading horizon Ta Chen Stainless is expected to generate 1.25 times more return on investment than Tung Ho. However, Ta Chen is 1.25 times more volatile than Tung Ho Steel. It trades about 0.4 of its potential returns per unit of risk. Tung Ho Steel is currently generating about -0.07 per unit of risk. If you would invest 2,975 in Ta Chen Stainless on October 24, 2024 and sell it today you would earn a total of 415.00 from holding Ta Chen Stainless or generate 13.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ta Chen Stainless vs. Tung Ho Steel
Performance |
| Timeline |
| Ta Chen Stainless |
| Tung Ho Steel |
Ta Chen and Tung Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ta Chen and Tung Ho
The main advantage of trading using opposite Ta Chen and Tung Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Chen position performs unexpectedly, Tung Ho 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 Tung Ho will offset losses from the drop in Tung Ho's long position.| Ta Chen vs. Chung Hung Steel | Ta Chen vs. China Steel Corp | Ta Chen vs. Tung Ho Steel | Ta Chen vs. Yang Ming Marine |
| Tung Ho vs. China Steel Corp | Tung Ho vs. Feng Hsin Steel | Tung Ho vs. Ta Chen Stainless | Tung Ho vs. Chung Hung Steel |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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