Correlation Between Tang Eng and Ardentec
Can any of the company-specific risk be diversified away by investing in both Tang Eng and Ardentec 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 Ardentec 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 Ardentec, you can compare the effects of market volatilities on Tang Eng and Ardentec 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 Ardentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tang Eng and Ardentec.
Diversification Opportunities for Tang Eng and Ardentec
Excellent diversification
The 3 months correlation between Tang and Ardentec is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tang Eng Iron and Ardentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardentec 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 Ardentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardentec has no effect on the direction of Tang Eng i.e., Tang Eng and Ardentec go up and down completely randomly.
Pair Corralation between Tang Eng and Ardentec
Assuming the 90 days trading horizon Tang Eng Iron is expected to generate 0.5 times more return on investment than Ardentec. However, Tang Eng Iron is 1.99 times less risky than Ardentec. It trades about 0.03 of its potential returns per unit of risk. Ardentec is currently generating about -0.01 per unit of risk. If you would invest 3,010 in Tang Eng Iron on September 12, 2024 and sell it today you would earn a total of 270.00 from holding Tang Eng Iron or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tang Eng Iron vs. Ardentec
Performance |
| Timeline |
| Tang Eng Iron |
| Ardentec |
Tang Eng and Ardentec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tang Eng and Ardentec
The main advantage of trading using opposite Tang Eng and Ardentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tang Eng position performs unexpectedly, Ardentec 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 Ardentec will offset losses from the drop in Ardentec's long position.| Tang Eng vs. Tainan Spinning Co | Tang Eng vs. Lealea Enterprise Co | Tang Eng vs. China Petrochemical Development | Tang Eng vs. Ruentex Development Co |
| Ardentec vs. Tang Eng Iron | Ardentec vs. Information Technology Total | Ardentec vs. Evergreen International Storage | Ardentec vs. AVer Information |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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