Correlation Between Tong Tai and Rechi Precision
Can any of the company-specific risk be diversified away by investing in both Tong Tai and Rechi Precision 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 Rechi Precision 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 Rechi Precision Co, you can compare the effects of market volatilities on Tong Tai and Rechi Precision 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 Rechi Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Tai and Rechi Precision.
Diversification Opportunities for Tong Tai and Rechi Precision
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tong and Rechi is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tong Tai Machine Tool and Rechi Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rechi Precision 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 Rechi Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rechi Precision has no effect on the direction of Tong Tai i.e., Tong Tai and Rechi Precision go up and down completely randomly.
Pair Corralation between Tong Tai and Rechi Precision
Assuming the 90 days trading horizon Tong Tai Machine Tool is expected to generate 1.48 times more return on investment than Rechi Precision. However, Tong Tai is 1.48 times more volatile than Rechi Precision Co. It trades about 0.07 of its potential returns per unit of risk. Rechi Precision Co is currently generating about 0.06 per unit of risk. If you would invest 1,655 in Tong Tai Machine Tool on August 31, 2024 and sell it today you would earn a total of 1,550 from holding Tong Tai Machine Tool or generate 93.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tong Tai Machine Tool vs. Rechi Precision Co
Performance |
| Timeline |
| Tong Tai Machine |
| Rechi Precision |
Tong Tai and Rechi Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Tai and Rechi Precision
The main advantage of trading using opposite Tong Tai and Rechi Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Tai position performs unexpectedly, Rechi Precision 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 Rechi Precision will offset losses from the drop in Rechi Precision's long position.| Tong Tai vs. BES Engineering Co | Tong Tai vs. Continental Holdings Corp | Tong Tai vs. Kee Tai Properties | Tong Tai vs. Hung Sheng Construction |
| Rechi Precision vs. Basso Industry Corp | Rechi Precision vs. Kinik Co | Rechi Precision vs. Tong Tai Machine Tool | Rechi Precision vs. Cheng Shin Rubber |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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