Correlation Between TMP Steel and Chung Hung
Can any of the company-specific risk be diversified away by investing in both TMP Steel and Chung Hung 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 TMP Steel and Chung Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMP Steel and Chung Hung Steel, you can compare the effects of market volatilities on TMP Steel and Chung Hung 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 TMP Steel with a short position of Chung Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMP Steel and Chung Hung.
Diversification Opportunities for TMP Steel and Chung Hung
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TMP and Chung is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding TMP Steel and Chung Hung Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hung Steel and TMP Steel 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 TMP Steel are associated (or correlated) with Chung Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hung Steel has no effect on the direction of TMP Steel i.e., TMP Steel and Chung Hung go up and down completely randomly.
Pair Corralation between TMP Steel and Chung Hung
Assuming the 90 days trading horizon TMP Steel is expected to under-perform the Chung Hung. But the stock apears to be less risky and, when comparing its historical volatility, TMP Steel is 1.74 times less risky than Chung Hung. The stock trades about -0.14 of its potential returns per unit of risk. The Chung Hung Steel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,900 in Chung Hung Steel on August 31, 2024 and sell it today you would earn a total of 95.00 from holding Chung Hung Steel or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMP Steel vs. Chung Hung Steel
Performance |
| Timeline |
| TMP Steel |
| Chung Hung Steel |
TMP Steel and Chung Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMP Steel and Chung Hung
The main advantage of trading using opposite TMP Steel and Chung Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMP Steel position performs unexpectedly, Chung Hung 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 Chung Hung will offset losses from the drop in Chung Hung's long position.| TMP Steel vs. Energenesis Biomedical Co | TMP Steel vs. Universal Microelectronics Co | TMP Steel vs. Est Global Apparel | TMP Steel vs. Top Union Electronics |
| Chung Hung vs. China Steel Corp | Chung Hung vs. Yieh Phui Enterprise | Chung Hung vs. Ta Chen Stainless | Chung Hung vs. Yang Ming Marine |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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