Correlation Between Datavan International and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Datavan International and Tehmag Foods 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 Datavan International and Tehmag Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datavan International and Tehmag Foods, you can compare the effects of market volatilities on Datavan International and Tehmag Foods 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 Datavan International with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datavan International and Tehmag Foods.
Diversification Opportunities for Datavan International and Tehmag Foods
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Datavan and Tehmag is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Datavan International and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and Datavan International 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 Datavan International are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Datavan International i.e., Datavan International and Tehmag Foods go up and down completely randomly.
Pair Corralation between Datavan International and Tehmag Foods
Assuming the 90 days trading horizon Datavan International is expected to generate 8.63 times more return on investment than Tehmag Foods. However, Datavan International is 8.63 times more volatile than Tehmag Foods. It trades about 0.08 of its potential returns per unit of risk. Tehmag Foods is currently generating about -0.19 per unit of risk. If you would invest 1,690 in Datavan International on September 5, 2024 and sell it today you would earn a total of 225.00 from holding Datavan International or generate 13.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Datavan International vs. Tehmag Foods
Performance |
Timeline |
Datavan International |
Tehmag Foods |
Datavan International and Tehmag Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Datavan International and Tehmag Foods
The main advantage of trading using opposite Datavan International and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datavan International position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.Datavan International vs. Professional Computer Technology | Datavan International vs. Hannstar Display Corp | Datavan International vs. U Media Communications | Datavan International vs. Asustek Computer |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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