Correlation Between Tung Thih and Alcor Micro

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Can any of the company-specific risk be diversified away by investing in both Tung Thih and Alcor Micro 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 Alcor Micro 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 Alcor Micro, you can compare the effects of market volatilities on Tung Thih and Alcor Micro 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 Alcor Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Thih and Alcor Micro.

Diversification Opportunities for Tung Thih and Alcor Micro

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Tung and Alcor is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and Alcor Micro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcor Micro 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 Alcor Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcor Micro has no effect on the direction of Tung Thih i.e., Tung Thih and Alcor Micro go up and down completely randomly.

Pair Corralation between Tung Thih and Alcor Micro

Assuming the 90 days trading horizon Tung Thih Electronic is expected to generate 1.75 times more return on investment than Alcor Micro. However, Tung Thih is 1.75 times more volatile than Alcor Micro. It trades about 0.01 of its potential returns per unit of risk. Alcor Micro is currently generating about -0.24 per unit of risk. If you would invest  9,970  in Tung Thih Electronic on August 31, 2024 and sell it today you would lose (120.00) from holding Tung Thih Electronic or give up 1.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Tung Thih Electronic  vs.  Alcor Micro

 Performance 
       Timeline  
Tung Thih Electronic 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Tung Thih Electronic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tung Thih showed solid returns over the last few months and may actually be approaching a breakup point.
Alcor Micro 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Alcor Micro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Tung Thih and Alcor Micro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tung Thih and Alcor Micro

The main advantage of trading using opposite Tung Thih and Alcor Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Thih position performs unexpectedly, Alcor Micro 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 Alcor Micro will offset losses from the drop in Alcor Micro's long position.
The idea behind Tung Thih Electronic and Alcor Micro 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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