Correlation Between Tung Thih and Tai Tung
Can any of the company-specific risk be diversified away by investing in both Tung Thih and Tai Tung 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 Tai Tung 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 Tai Tung Communication, you can compare the effects of market volatilities on Tung Thih and Tai Tung 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 Tai Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Thih and Tai Tung.
Diversification Opportunities for Tung Thih and Tai Tung
Very poor diversification
The 3 months correlation between Tung and Tai is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and Tai Tung Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tai Tung Communication 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 Tai Tung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tai Tung Communication has no effect on the direction of Tung Thih i.e., Tung Thih and Tai Tung go up and down completely randomly.
Pair Corralation between Tung Thih and Tai Tung
Assuming the 90 days trading horizon Tung Thih Electronic is expected to generate 22.01 times more return on investment than Tai Tung. However, Tung Thih is 22.01 times more volatile than Tai Tung Communication. It trades about 0.06 of its potential returns per unit of risk. Tai Tung Communication is currently generating about 0.05 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tung Thih Electronic vs. Tai Tung Communication
Performance |
| Timeline |
| Tung Thih Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tai Tung Communication |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tung Thih and Tai Tung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Thih and Tai Tung
The main advantage of trading using opposite Tung Thih and Tai Tung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Thih position performs unexpectedly, Tai Tung 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 Tai Tung will offset losses from the drop in Tai Tung's long position.The idea behind Tung Thih Electronic and Tai Tung Communication 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stocks Directory Find actively traded stocks across global markets |