Correlation Between U Tech and TMP Steel
Can any of the company-specific risk be diversified away by investing in both U Tech and TMP Steel 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 U Tech and TMP Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Tech Media Corp and TMP Steel, you can compare the effects of market volatilities on U Tech and TMP Steel 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 U Tech with a short position of TMP Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Tech and TMP Steel.
Diversification Opportunities for U Tech and TMP Steel
Very weak diversification
The 3 months correlation between 3050 and TMP is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding U Tech Media Corp and TMP Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMP Steel and U Tech 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 U Tech Media Corp are associated (or correlated) with TMP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMP Steel has no effect on the direction of U Tech i.e., U Tech and TMP Steel go up and down completely randomly.
Pair Corralation between U Tech and TMP Steel
Assuming the 90 days trading horizon U Tech Media Corp is expected to generate 3.22 times more return on investment than TMP Steel. However, U Tech is 3.22 times more volatile than TMP Steel. It trades about -0.01 of its potential returns per unit of risk. TMP Steel is currently generating about -0.15 per unit of risk. If you would invest 1,840 in U Tech Media Corp on September 12, 2024 and sell it today you would lose (20.00) from holding U Tech Media Corp or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
U Tech Media Corp vs. TMP Steel
Performance |
| Timeline |
| U Tech Media |
| TMP Steel |
U Tech and TMP Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Tech and TMP Steel
The main advantage of trading using opposite U Tech and TMP Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Tech position performs unexpectedly, TMP Steel 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 TMP Steel will offset losses from the drop in TMP Steel's long position.| U Tech vs. AU Optronics | U Tech vs. Innolux Corp | U Tech vs. Ruentex Development Co | U Tech vs. WiseChip Semiconductor |
| TMP Steel vs. Tong Tai Machine Tool | TMP Steel vs. Oriental Union Chemical | TMP Steel vs. Ruentex Development Co | TMP Steel vs. Symtek Automation Asia |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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