Correlation Between Tong Tai and CSBC Corp
Can any of the company-specific risk be diversified away by investing in both Tong Tai and CSBC Corp 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 Tong Tai and CSBC Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tong Tai Machine Tool and CSBC Corp Taiwan, you can compare the effects of market volatilities on Tong Tai and CSBC Corp 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 Tong Tai with a short position of CSBC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Tai and CSBC Corp.
Diversification Opportunities for Tong Tai and CSBC Corp
Significant diversification
The 3 months correlation between Tong and CSBC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Tong Tai Machine Tool and CSBC Corp Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSBC Corp Taiwan and Tong Tai 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 Tong Tai Machine Tool are associated (or correlated) with CSBC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSBC Corp Taiwan has no effect on the direction of Tong Tai i.e., Tong Tai and CSBC Corp go up and down completely randomly.
Pair Corralation between Tong Tai and CSBC Corp
Assuming the 90 days trading horizon Tong Tai Machine Tool is expected to generate 2.38 times more return on investment than CSBC Corp. However, Tong Tai is 2.38 times more volatile than CSBC Corp Taiwan. It trades about -0.02 of its potential returns per unit of risk. CSBC Corp Taiwan is currently generating about -0.06 per unit of risk. If you would invest 3,300 in Tong Tai Machine Tool on August 28, 2024 and sell it today you would lose (80.00) from holding Tong Tai Machine Tool or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tong Tai Machine Tool vs. CSBC Corp Taiwan
Performance |
| Timeline |
| Tong Tai Machine |
| CSBC Corp Taiwan |
Tong Tai and CSBC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Tai and CSBC Corp
The main advantage of trading using opposite Tong Tai and CSBC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Tai position performs unexpectedly, CSBC Corp 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 CSBC Corp will offset losses from the drop in CSBC Corp's long position.| Tong Tai vs. Sunny Friend Environmental | Tong Tai vs. TTET Union Corp | Tong Tai vs. ECOVE Environment Corp | Tong Tai vs. Yulon Finance Corp |
| CSBC Corp vs. Sincere Navigation Corp | CSBC Corp vs. Evergreen International Storage | CSBC Corp vs. First Steamship Co | CSBC Corp vs. Mercuries Life Insurance |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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