Correlation Between TMP Steel and Tong Tai
Can any of the company-specific risk be diversified away by investing in both TMP Steel and Tong Tai 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 Tong Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMP Steel and Tong Tai Machine Tool, you can compare the effects of market volatilities on TMP Steel and Tong Tai 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 Tong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMP Steel and Tong Tai.
Diversification Opportunities for TMP Steel and Tong Tai
Poor diversification
The 3 months correlation between TMP and Tong is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding TMP Steel and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine 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 Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of TMP Steel i.e., TMP Steel and Tong Tai go up and down completely randomly.
Pair Corralation between TMP Steel and Tong Tai
Assuming the 90 days trading horizon TMP Steel is expected to generate 0.21 times more return on investment than Tong Tai. However, TMP Steel is 4.69 times less risky than Tong Tai. It trades about -0.04 of its potential returns per unit of risk. Tong Tai Machine Tool is currently generating about -0.03 per unit of risk. If you would invest 2,855 in TMP Steel on September 13, 2024 and sell it today you would lose (15.00) from holding TMP Steel or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMP Steel vs. Tong Tai Machine Tool
Performance |
| Timeline |
| TMP Steel |
| Tong Tai Machine |
TMP Steel and Tong Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMP Steel and Tong Tai
The main advantage of trading using opposite TMP Steel and Tong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMP Steel position performs unexpectedly, Tong Tai 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 Tong Tai will offset losses from the drop in Tong Tai's long position.| TMP Steel vs. Chi Sheng Chemical | TMP Steel vs. Feng Ching Metal | TMP Steel vs. Taiwan Speciality Chemicals | TMP Steel vs. Oceanic Beverages Co |
| Tong Tai vs. Yang Ming Marine | Tong Tai vs. Wan Hai Lines | Tong Tai vs. U Ming Marine Transport | Tong Tai vs. Taiwan Navigation Co |
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.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |