Correlation Between MPI and Tung Thih
Can any of the company-specific risk be diversified away by investing in both MPI and Tung Thih 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 MPI and Tung Thih into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MPI Corporation and Tung Thih Electronic, you can compare the effects of market volatilities on MPI and Tung Thih 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 MPI with a short position of Tung Thih. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPI and Tung Thih.
Diversification Opportunities for MPI and Tung Thih
Good diversification
The 3 months correlation between MPI and Tung is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding MPI Corp. and Tung Thih Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Thih Electronic and MPI 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 MPI Corporation are associated (or correlated) with Tung Thih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Thih Electronic has no effect on the direction of MPI i.e., MPI and Tung Thih go up and down completely randomly.
Pair Corralation between MPI and Tung Thih
Assuming the 90 days trading horizon MPI is expected to generate 5.86 times less return on investment than Tung Thih. But when comparing it to its historical volatility, MPI Corporation is 17.28 times less risky than Tung Thih. It trades about 0.17 of its potential returns per unit of risk. Tung Thih Electronic is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,989 in Tung Thih Electronic on September 2, 2024 and sell it today you would lose (2,989) from holding Tung Thih Electronic or give up 23.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MPI Corp. vs. Tung Thih Electronic
Performance |
| Timeline |
| MPI Corporation |
| Tung Thih Electronic |
MPI and Tung Thih Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPI and Tung Thih
The main advantage of trading using opposite MPI and Tung Thih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPI position performs unexpectedly, Tung Thih 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 Tung Thih will offset losses from the drop in Tung Thih's long position.| MPI vs. Sino American Silicon Products | MPI vs. Powertech Technology | MPI vs. Formosa Sumco Technology | MPI vs. Radiant Opto Electronics Corp |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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