Correlation Between Tung Thih and Bright Led
Can any of the company-specific risk be diversified away by investing in both Tung Thih and Bright Led 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 Bright Led 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 Bright Led Electronics, you can compare the effects of market volatilities on Tung Thih and Bright Led 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 Bright Led. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Thih and Bright Led.
Diversification Opportunities for Tung Thih and Bright Led
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tung and Bright is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and Bright Led Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Led Electronics 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 Bright Led. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Led Electronics has no effect on the direction of Tung Thih i.e., Tung Thih and Bright Led go up and down completely randomly.
Pair Corralation between Tung Thih and Bright Led
Assuming the 90 days trading horizon Tung Thih Electronic is expected to generate 0.75 times more return on investment than Bright Led. However, Tung Thih Electronic is 1.34 times less risky than Bright Led. It trades about -0.15 of its potential returns per unit of risk. Bright Led Electronics is currently generating about -0.22 per unit of risk. If you would invest 8,880 in Tung Thih Electronic on November 2, 2024 and sell it today you would lose (410.00) from holding Tung Thih Electronic or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tung Thih Electronic vs. Bright Led Electronics
Performance |
| Timeline |
| Tung Thih Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bright Led Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Tung Thih and Bright Led Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Thih and Bright Led
The main advantage of trading using opposite Tung Thih and Bright Led positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Thih position performs unexpectedly, Bright Led 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 Bright Led will offset losses from the drop in Bright Led's long position.The idea behind Tung Thih Electronic and Bright Led Electronics 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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