Correlation Between Faraday Technology and Tong Hsing
Can any of the company-specific risk be diversified away by investing in both Faraday Technology 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 Faraday Technology and Tong Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faraday Technology Corp and Tong Hsing Electronic, you can compare the effects of market volatilities on Faraday Technology 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 Faraday Technology with a short position of Tong Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Technology and Tong Hsing.
Diversification Opportunities for Faraday Technology and Tong Hsing
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Faraday and Tong is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Technology Corp 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 Faraday Technology 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 Faraday Technology Corp 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 Faraday Technology i.e., Faraday Technology and Tong Hsing go up and down completely randomly.
Pair Corralation between Faraday Technology and Tong Hsing
Assuming the 90 days trading horizon Faraday Technology Corp is expected to under-perform the Tong Hsing. In addition to that, Faraday Technology is 1.47 times more volatile than Tong Hsing Electronic. It trades about -0.06 of its total potential returns per unit of risk. Tong Hsing Electronic is currently generating about -0.05 per unit of volatility. If you would invest 15,250 in Tong Hsing Electronic on September 1, 2024 and sell it today you would lose (2,350) from holding Tong Hsing Electronic or give up 15.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
Faraday Technology Corp vs. Tong Hsing Electronic
Performance |
| Timeline |
| Faraday Technology Corp |
| Tong Hsing Electronic |
Faraday Technology and Tong Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Technology and Tong Hsing
The main advantage of trading using opposite Faraday Technology and Tong Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Technology 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.| Faraday Technology vs. Global Unichip Corp | Faraday Technology vs. Novatek Microelectronics Corp | Faraday Technology vs. Realtek Semiconductor Corp | Faraday Technology vs. Unimicron Technology Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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