Correlation Between Tang Eng and Basso Industry
Can any of the company-specific risk be diversified away by investing in both Tang Eng and Basso Industry 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 Tang Eng and Basso Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tang Eng Iron and Basso Industry Corp, you can compare the effects of market volatilities on Tang Eng and Basso Industry 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 Tang Eng with a short position of Basso Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tang Eng and Basso Industry.
Diversification Opportunities for Tang Eng and Basso Industry
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tang and Basso is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tang Eng Iron and Basso Industry Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basso Industry Corp and Tang Eng 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 Tang Eng Iron are associated (or correlated) with Basso Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basso Industry Corp has no effect on the direction of Tang Eng i.e., Tang Eng and Basso Industry go up and down completely randomly.
Pair Corralation between Tang Eng and Basso Industry
Assuming the 90 days trading horizon Tang Eng is expected to generate 1.01 times less return on investment than Basso Industry. But when comparing it to its historical volatility, Tang Eng Iron is 1.28 times less risky than Basso Industry. It trades about 0.02 of its potential returns per unit of risk. Basso Industry Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,120 in Basso Industry Corp on September 2, 2024 and sell it today you would earn a total of 150.00 from holding Basso Industry Corp or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tang Eng Iron vs. Basso Industry Corp
Performance |
| Timeline |
| Tang Eng Iron |
| Basso Industry Corp |
Tang Eng and Basso Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tang Eng and Basso Industry
The main advantage of trading using opposite Tang Eng and Basso Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tang Eng position performs unexpectedly, Basso Industry 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 Basso Industry will offset losses from the drop in Basso Industry's long position.| Tang Eng vs. Basso Industry Corp | Tang Eng vs. Chung Hsin Electric Machinery | Tang Eng vs. TYC Brother Industrial | Tang Eng vs. TECO Electric Machinery |
| Basso Industry vs. Chaintech Technology Corp | Basso Industry vs. Avision | Basso Industry vs. Clevo Co | Basso Industry vs. Elitegroup Computer Systems |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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