Correlation Between Tung Thih and Thinking Electronic
Can any of the company-specific risk be diversified away by investing in both Tung Thih and Thinking Electronic 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 Tung Thih and Thinking Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tung Thih Electronic and Thinking Electronic Industrial, you can compare the effects of market volatilities on Tung Thih and Thinking Electronic 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 Tung Thih with a short position of Thinking Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Thih and Thinking Electronic.
Diversification Opportunities for Tung Thih and Thinking Electronic
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tung and Thinking is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and Thinking Electronic Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinking Electronic and Tung Thih 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 Tung Thih Electronic are associated (or correlated) with Thinking Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinking Electronic has no effect on the direction of Tung Thih i.e., Tung Thih and Thinking Electronic go up and down completely randomly.
Pair Corralation between Tung Thih and Thinking Electronic
Assuming the 90 days trading horizon Tung Thih Electronic is expected to generate 34.8 times more return on investment than Thinking Electronic. However, Tung Thih is 34.8 times more volatile than Thinking Electronic Industrial. It trades about 0.06 of its potential returns per unit of risk. Thinking Electronic Industrial is currently generating about 0.02 per unit of risk. If you would invest 13,181 in Tung Thih Electronic on November 5, 2024 and sell it today you would lose (4,711) from holding Tung Thih Electronic or give up 35.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tung Thih Electronic vs. Thinking Electronic Industrial
Performance |
| Timeline |
| Tung Thih Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Thinking Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tung Thih and Thinking Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Thih and Thinking Electronic
The main advantage of trading using opposite Tung Thih and Thinking Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Thih position performs unexpectedly, Thinking Electronic 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 Thinking Electronic will offset losses from the drop in Thinking Electronic's long position.The idea behind Tung Thih Electronic and Thinking Electronic Industrial 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.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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