Correlation Between Thinking Electronic and Tai Tung
Can any of the company-specific risk be diversified away by investing in both Thinking Electronic and Tai Tung 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 Thinking Electronic and Tai Tung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thinking Electronic Industrial and Tai Tung Communication, you can compare the effects of market volatilities on Thinking Electronic and Tai Tung 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 Thinking Electronic with a short position of Tai Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thinking Electronic and Tai Tung.
Diversification Opportunities for Thinking Electronic and Tai Tung
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thinking and Tai is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Thinking Electronic Industrial and Tai Tung Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tai Tung Communication and Thinking Electronic 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 Thinking Electronic Industrial are associated (or correlated) with Tai Tung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tai Tung Communication has no effect on the direction of Thinking Electronic i.e., Thinking Electronic and Tai Tung go up and down completely randomly.
Pair Corralation between Thinking Electronic and Tai Tung
Assuming the 90 days trading horizon Thinking Electronic is expected to generate 3.45 times less return on investment than Tai Tung. But when comparing it to its historical volatility, Thinking Electronic Industrial is 1.58 times less risky than Tai Tung. It trades about 0.02 of its potential returns per unit of risk. Tai Tung Communication is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,430 in Tai Tung Communication on November 5, 2024 and sell it today you would earn a total of 825.00 from holding Tai Tung Communication or generate 57.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thinking Electronic Industrial vs. Tai Tung Communication
Performance |
| Timeline |
| Thinking Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tai Tung Communication |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Thinking Electronic and Tai Tung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thinking Electronic and Tai Tung
The main advantage of trading using opposite Thinking Electronic and Tai Tung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thinking Electronic position performs unexpectedly, Tai Tung 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 Tai Tung will offset losses from the drop in Tai Tung's long position.The idea behind Thinking Electronic Industrial and Tai Tung Communication pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |