Correlation Between Newcapec Electronics and TongFu Microelectronics
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By analyzing existing cross correlation between Newcapec Electronics Co and TongFu Microelectronics Co, you can compare the effects of market volatilities on Newcapec Electronics and TongFu Microelectronics 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 Newcapec Electronics with a short position of TongFu Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newcapec Electronics and TongFu Microelectronics.
Diversification Opportunities for Newcapec Electronics and TongFu Microelectronics
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Newcapec and TongFu is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Newcapec Electronics Co and TongFu Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TongFu Microelectronics and Newcapec Electronics 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 Newcapec Electronics Co are associated (or correlated) with TongFu Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TongFu Microelectronics has no effect on the direction of Newcapec Electronics i.e., Newcapec Electronics and TongFu Microelectronics go up and down completely randomly.
Pair Corralation between Newcapec Electronics and TongFu Microelectronics
Assuming the 90 days trading horizon Newcapec Electronics Co is expected to generate 1.72 times more return on investment than TongFu Microelectronics. However, Newcapec Electronics is 1.72 times more volatile than TongFu Microelectronics Co. It trades about 0.25 of its potential returns per unit of risk. TongFu Microelectronics Co is currently generating about 0.08 per unit of risk. If you would invest 947.00 in Newcapec Electronics Co on November 3, 2024 and sell it today you would earn a total of 180.00 from holding Newcapec Electronics Co or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newcapec Electronics Co vs. TongFu Microelectronics Co
Performance |
| Timeline |
| Newcapec Electronics |
| TongFu Microelectronics |
Newcapec Electronics and TongFu Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newcapec Electronics and TongFu Microelectronics
The main advantage of trading using opposite Newcapec Electronics and TongFu Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newcapec Electronics position performs unexpectedly, TongFu Microelectronics 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 TongFu Microelectronics will offset losses from the drop in TongFu Microelectronics' long position.The idea behind Newcapec Electronics Co and TongFu Microelectronics Co 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.
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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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