Correlation Between Weihai Honglin and TongFu Microelectronics
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By analyzing existing cross correlation between Weihai Honglin Electronic and TongFu Microelectronics Co, you can compare the effects of market volatilities on Weihai Honglin 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 Weihai Honglin with a short position of TongFu Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weihai Honglin and TongFu Microelectronics.
Diversification Opportunities for Weihai Honglin and TongFu Microelectronics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Weihai and TongFu is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Weihai Honglin Electronic and TongFu Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TongFu Microelectronics and Weihai Honglin 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 Weihai Honglin Electronic 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 Weihai Honglin i.e., Weihai Honglin and TongFu Microelectronics go up and down completely randomly.
Pair Corralation between Weihai Honglin and TongFu Microelectronics
Assuming the 90 days trading horizon Weihai Honglin Electronic is expected to under-perform the TongFu Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Weihai Honglin Electronic is 2.79 times less risky than TongFu Microelectronics. The stock trades about -0.05 of its potential returns per unit of risk. The TongFu Microelectronics Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,702 in TongFu Microelectronics Co on September 1, 2024 and sell it today you would earn a total of 297.00 from holding TongFu Microelectronics Co or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weihai Honglin Electronic vs. TongFu Microelectronics Co
Performance |
| Timeline |
| Weihai Honglin Electronic |
| TongFu Microelectronics |
Weihai Honglin and TongFu Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weihai Honglin and TongFu Microelectronics
The main advantage of trading using opposite Weihai Honglin and TongFu Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weihai Honglin 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.| Weihai Honglin vs. Cultural Investment Holdings | Weihai Honglin vs. Gome Telecom Equipment | Weihai Honglin vs. Bus Online Co | Weihai Honglin vs. Holitech Technology Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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