Correlation Between Tong Tai and Globaltek Fabrication
Can any of the company-specific risk be diversified away by investing in both Tong Tai and Globaltek Fabrication 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 Globaltek Fabrication 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 Globaltek Fabrication Co, you can compare the effects of market volatilities on Tong Tai and Globaltek Fabrication 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 Globaltek Fabrication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Tai and Globaltek Fabrication.
Diversification Opportunities for Tong Tai and Globaltek Fabrication
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tong and Globaltek is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tong Tai Machine Tool and Globaltek Fabrication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globaltek Fabrication 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 Globaltek Fabrication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globaltek Fabrication has no effect on the direction of Tong Tai i.e., Tong Tai and Globaltek Fabrication go up and down completely randomly.
Pair Corralation between Tong Tai and Globaltek Fabrication
Assuming the 90 days trading horizon Tong Tai Machine Tool is expected to generate 1.08 times more return on investment than Globaltek Fabrication. However, Tong Tai is 1.08 times more volatile than Globaltek Fabrication Co. It trades about 0.07 of its potential returns per unit of risk. Globaltek Fabrication Co is currently generating about 0.05 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 Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Tong Tai Machine Tool vs. Globaltek Fabrication Co
Performance |
| Timeline |
| Tong Tai Machine |
| Globaltek Fabrication |
Tong Tai and Globaltek Fabrication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Tai and Globaltek Fabrication
The main advantage of trading using opposite Tong Tai and Globaltek Fabrication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Tai position performs unexpectedly, Globaltek Fabrication 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 Globaltek Fabrication will offset losses from the drop in Globaltek Fabrication'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 |
| Globaltek Fabrication vs. SCI Pharmtech | Globaltek Fabrication vs. ZongTai Real Estate | Globaltek Fabrication vs. Ying Han Technology | Globaltek Fabrication vs. Tripod Technology 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stocks Directory Find actively traded stocks across global markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |