Correlation Between Tung Thih and Kao Fong
Can any of the company-specific risk be diversified away by investing in both Tung Thih and Kao Fong 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 Kao Fong 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 Kao Fong Machinery, you can compare the effects of market volatilities on Tung Thih and Kao Fong 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 Kao Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Thih and Kao Fong.
Diversification Opportunities for Tung Thih and Kao Fong
Very good diversification
The 3 months correlation between Tung and Kao is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and Kao Fong Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kao Fong Machinery 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 Kao Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kao Fong Machinery has no effect on the direction of Tung Thih i.e., Tung Thih and Kao Fong go up and down completely randomly.
Pair Corralation between Tung Thih and Kao Fong
Assuming the 90 days trading horizon Tung Thih Electronic is expected to generate 17.39 times more return on investment than Kao Fong. However, Tung Thih is 17.39 times more volatile than Kao Fong Machinery. It trades about 0.08 of its potential returns per unit of risk. Kao Fong Machinery is currently generating about 0.19 per unit of risk. If you would invest 10,053 in Tung Thih Electronic on September 3, 2024 and sell it today you would lose (173.00) from holding Tung Thih Electronic or give up 1.72% 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. Kao Fong Machinery
Performance |
| Timeline |
| Tung Thih Electronic |
| Kao Fong Machinery |
Tung Thih and Kao Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Thih and Kao Fong
The main advantage of trading using opposite Tung Thih and Kao Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Thih position performs unexpectedly, Kao Fong 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 Kao Fong will offset losses from the drop in Kao Fong's long position.| Tung Thih vs. E Lead Electronic Co | Tung Thih vs. Jentech Precision Industrial | Tung Thih vs. Turvo International Co | Tung Thih vs. Ruentex Development Co |
| Kao Fong vs. Airtac International Group | Kao Fong vs. TECO Electric Machinery | Kao Fong vs. Chung Hsin Electric Machinery | Kao Fong vs. Ruentex Development Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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