Correlation Between Tang Eng and Chain Chon
Can any of the company-specific risk be diversified away by investing in both Tang Eng and Chain Chon 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 Chain Chon 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 Chain Chon Industrial, you can compare the effects of market volatilities on Tang Eng and Chain Chon 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 Chain Chon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tang Eng and Chain Chon.
Diversification Opportunities for Tang Eng and Chain Chon
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tang and Chain is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Tang Eng Iron and Chain Chon Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chain Chon Industrial 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 Chain Chon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chain Chon Industrial has no effect on the direction of Tang Eng i.e., Tang Eng and Chain Chon go up and down completely randomly.
Pair Corralation between Tang Eng and Chain Chon
Assuming the 90 days trading horizon Tang Eng Iron is expected to generate 0.28 times more return on investment than Chain Chon. However, Tang Eng Iron is 3.6 times less risky than Chain Chon. It trades about 0.07 of its potential returns per unit of risk. Chain Chon Industrial is currently generating about -0.29 per unit of risk. If you would invest 3,280 in Tang Eng Iron on August 30, 2024 and sell it today you would earn a total of 40.00 from holding Tang Eng Iron or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tang Eng Iron vs. Chain Chon Industrial
Performance |
| Timeline |
| Tang Eng Iron |
| Chain Chon Industrial |
Tang Eng and Chain Chon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tang Eng and Chain Chon
The main advantage of trading using opposite Tang Eng and Chain Chon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tang Eng position performs unexpectedly, Chain Chon 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 Chain Chon will offset losses from the drop in Chain Chon's long position.| Tang Eng vs. Formosan Union Chemical | Tang Eng vs. Taita Chemical Co | Tang Eng vs. Phoenix Silicon International | Tang Eng vs. Silicon Power Computer |
| Chain Chon vs. Tung Ho Steel | Chain Chon vs. Wei Chih Steel | Chain Chon vs. Newretail Co | Chain Chon 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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