Correlation Between Tang Eng and Xintec
Can any of the company-specific risk be diversified away by investing in both Tang Eng and Xintec 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 Xintec 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 Xintec, you can compare the effects of market volatilities on Tang Eng and Xintec 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 Xintec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tang Eng and Xintec.
Diversification Opportunities for Tang Eng and Xintec
Excellent diversification
The 3 months correlation between Tang and Xintec is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tang Eng Iron and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec 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 Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of Tang Eng i.e., Tang Eng and Xintec go up and down completely randomly.
Pair Corralation between Tang Eng and Xintec
Assuming the 90 days trading horizon Tang Eng is expected to generate 5.4 times less return on investment than Xintec. But when comparing it to its historical volatility, Tang Eng Iron is 3.23 times less risky than Xintec. It trades about 0.03 of its potential returns per unit of risk. Xintec is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13,497 in Xintec on September 12, 2024 and sell it today you would earn a total of 6,503 from holding Xintec or generate 48.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
Tang Eng Iron vs. Xintec
Performance |
| Timeline |
| Tang Eng Iron |
| Xintec |
Tang Eng and Xintec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tang Eng and Xintec
The main advantage of trading using opposite Tang Eng and Xintec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tang Eng position performs unexpectedly, Xintec 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 Xintec will offset losses from the drop in Xintec'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 |
| Xintec vs. Wei Chih Steel | Xintec vs. Century Iron And | Xintec vs. Lian Hwa Foods | Xintec vs. Tang Eng Iron |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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