Correlation Between Froch Enterprise and Tung Ho
Can any of the company-specific risk be diversified away by investing in both Froch Enterprise 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 Froch Enterprise and Tung Ho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Froch Enterprise Co and Tung Ho Steel, you can compare the effects of market volatilities on Froch Enterprise 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 Froch Enterprise with a short position of Tung Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Froch Enterprise and Tung Ho.
Diversification Opportunities for Froch Enterprise and Tung Ho
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Froch and Tung is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Froch Enterprise Co 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 Froch Enterprise 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 Froch Enterprise Co 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 Froch Enterprise i.e., Froch Enterprise and Tung Ho go up and down completely randomly.
Pair Corralation between Froch Enterprise and Tung Ho
Assuming the 90 days trading horizon Froch Enterprise Co is expected to generate 1.26 times more return on investment than Tung Ho. However, Froch Enterprise is 1.26 times more volatile than Tung Ho Steel. It trades about -0.07 of its potential returns per unit of risk. Tung Ho Steel is currently generating about -0.12 per unit of risk. If you would invest 1,830 in Froch Enterprise Co on August 30, 2024 and sell it today you would lose (50.00) from holding Froch Enterprise Co or give up 2.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Froch Enterprise Co vs. Tung Ho Steel
Performance |
| Timeline |
| Froch Enterprise |
| Tung Ho Steel |
Froch Enterprise and Tung Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Froch Enterprise and Tung Ho
The main advantage of trading using opposite Froch Enterprise and Tung Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Froch Enterprise 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.| Froch Enterprise vs. Ta Chen Stainless | Froch Enterprise vs. Chung Hung Steel | Froch Enterprise vs. YC Inox Co | Froch Enterprise vs. Sheng Yu Steel |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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