Correlation Between TMP Steel and Thunder Tiger
Can any of the company-specific risk be diversified away by investing in both TMP Steel and Thunder Tiger 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 Thunder Tiger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMP Steel and Thunder Tiger Corp, you can compare the effects of market volatilities on TMP Steel and Thunder Tiger 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 Thunder Tiger. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMP Steel and Thunder Tiger.
Diversification Opportunities for TMP Steel and Thunder Tiger
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TMP and Thunder is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding TMP Steel and Thunder Tiger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Tiger Corp 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 Thunder Tiger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Tiger Corp has no effect on the direction of TMP Steel i.e., TMP Steel and Thunder Tiger go up and down completely randomly.
Pair Corralation between TMP Steel and Thunder Tiger
Assuming the 90 days trading horizon TMP Steel is expected to generate 1.64 times less return on investment than Thunder Tiger. But when comparing it to its historical volatility, TMP Steel is 1.95 times less risky than Thunder Tiger. It trades about 0.05 of its potential returns per unit of risk. Thunder Tiger Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,125 in Thunder Tiger Corp on September 4, 2024 and sell it today you would earn a total of 1,835 from holding Thunder Tiger Corp or generate 44.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMP Steel vs. Thunder Tiger Corp
Performance |
| Timeline |
| TMP Steel |
| Thunder Tiger Corp |
TMP Steel and Thunder Tiger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMP Steel and Thunder Tiger
The main advantage of trading using opposite TMP Steel and Thunder Tiger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMP Steel position performs unexpectedly, Thunder Tiger 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 Thunder Tiger will offset losses from the drop in Thunder Tiger's long position.| TMP Steel vs. Holiday Entertainment Co | TMP Steel vs. U Tech Media Corp | TMP Steel vs. Evergreen International Storage | TMP Steel vs. Provision Information CoLtd |
| Thunder Tiger vs. Gloria Material Technology | Thunder Tiger vs. Ton Yi Industrial | Thunder Tiger vs. Acbel Polytech | Thunder Tiger vs. Sincere Navigation 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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