Correlation Between Elite Material and Tong Hsing
Can any of the company-specific risk be diversified away by investing in both Elite Material and Tong Hsing 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 Elite Material and Tong Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Material Co and Tong Hsing Electronic, you can compare the effects of market volatilities on Elite Material and Tong Hsing 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 Elite Material with a short position of Tong Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Material and Tong Hsing.
Diversification Opportunities for Elite Material and Tong Hsing
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Elite and Tong is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Elite Material Co and Tong Hsing Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hsing Electronic and Elite Material 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 Elite Material Co are associated (or correlated) with Tong Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hsing Electronic has no effect on the direction of Elite Material i.e., Elite Material and Tong Hsing go up and down completely randomly.
Pair Corralation between Elite Material and Tong Hsing
Assuming the 90 days trading horizon Elite Material Co is expected to generate 1.13 times more return on investment than Tong Hsing. However, Elite Material is 1.13 times more volatile than Tong Hsing Electronic. It trades about -0.01 of its potential returns per unit of risk. Tong Hsing Electronic is currently generating about -0.24 per unit of risk. If you would invest 60,800 in Elite Material Co on October 23, 2024 and sell it today you would lose (500.00) from holding Elite Material Co or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Material Co vs. Tong Hsing Electronic
Performance |
| Timeline |
| Elite Material |
| Tong Hsing Electronic |
Elite Material and Tong Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Material and Tong Hsing
The main advantage of trading using opposite Elite Material and Tong Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Material position performs unexpectedly, Tong Hsing 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 Tong Hsing will offset losses from the drop in Tong Hsing's long position.| Elite Material vs. Compeq Manufacturing Co | Elite Material vs. ITEQ Corp | Elite Material vs. Unimicron Technology Corp | Elite Material vs. Chicony Electronics Co |
| Tong Hsing vs. Kinsus Interconnect Technology | Tong Hsing vs. Unimicron Technology Corp | Tong Hsing vs. Nan Ya Printed | Tong Hsing vs. WIN Semiconductors |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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