Correlation Between Excelsior Medical and Tong Tai
Can any of the company-specific risk be diversified away by investing in both Excelsior Medical and Tong Tai 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 Excelsior Medical and Tong Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Excelsior Medical Co and Tong Tai Machine Tool, you can compare the effects of market volatilities on Excelsior Medical and Tong Tai 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 Excelsior Medical with a short position of Tong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelsior Medical and Tong Tai.
Diversification Opportunities for Excelsior Medical and Tong Tai
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Excelsior and Tong is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine and Excelsior Medical 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 Excelsior Medical Co are associated (or correlated) with Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and Tong Tai go up and down completely randomly.
Pair Corralation between Excelsior Medical and Tong Tai
Assuming the 90 days trading horizon Excelsior Medical Co is expected to under-perform the Tong Tai. But the stock apears to be less risky and, when comparing its historical volatility, Excelsior Medical Co is 11.15 times less risky than Tong Tai. The stock trades about -0.05 of its potential returns per unit of risk. The Tong Tai Machine Tool is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,300 in Tong Tai Machine Tool on August 29, 2024 and sell it today you would earn a total of 130.00 from holding Tong Tai Machine Tool or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Excelsior Medical Co vs. Tong Tai Machine Tool
Performance |
| Timeline |
| Excelsior Medical |
| Tong Tai Machine |
Excelsior Medical and Tong Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Excelsior Medical and Tong Tai
The main advantage of trading using opposite Excelsior Medical and Tong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelsior Medical position performs unexpectedly, Tong Tai 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 Tong Tai will offset losses from the drop in Tong Tai's long position.The idea behind Excelsior Medical Co and Tong Tai Machine Tool 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.| Tong Tai vs. Sunny Friend Environmental | Tong Tai vs. TTET Union Corp | Tong Tai vs. ECOVE Environment Corp | Tong Tai vs. Yulon Finance Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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