Correlation Between Top Union and TMP Steel
Can any of the company-specific risk be diversified away by investing in both Top Union and TMP Steel 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 Top Union and TMP Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Union Electronics and TMP Steel, you can compare the effects of market volatilities on Top Union and TMP Steel 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 Top Union with a short position of TMP Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Union and TMP Steel.
Diversification Opportunities for Top Union and TMP Steel
Excellent diversification
The 3 months correlation between Top and TMP is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Top Union Electronics and TMP Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMP Steel and Top Union 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 Top Union Electronics are associated (or correlated) with TMP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMP Steel has no effect on the direction of Top Union i.e., Top Union and TMP Steel go up and down completely randomly.
Pair Corralation between Top Union and TMP Steel
Assuming the 90 days trading horizon Top Union Electronics is expected to generate 1.16 times more return on investment than TMP Steel. However, Top Union is 1.16 times more volatile than TMP Steel. It trades about 0.05 of its potential returns per unit of risk. TMP Steel is currently generating about 0.05 per unit of risk. If you would invest 2,182 in Top Union Electronics on August 31, 2024 and sell it today you would earn a total of 1,108 from holding Top Union Electronics or generate 50.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Union Electronics vs. TMP Steel
Performance |
| Timeline |
| Top Union Electronics |
| TMP Steel |
Top Union and TMP Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Union and TMP Steel
The main advantage of trading using opposite Top Union and TMP Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Union position performs unexpectedly, TMP Steel 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 TMP Steel will offset losses from the drop in TMP Steel's long position.| Top Union vs. Sino American Silicon Products | Top Union vs. Powertech Technology | Top Union vs. Formosa Sumco Technology | Top Union vs. Radiant Opto Electronics Corp |
| TMP Steel vs. Energenesis Biomedical Co | TMP Steel vs. Universal Microelectronics Co | TMP Steel vs. Est Global Apparel | TMP Steel vs. Top Union Electronics |
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 CEOs Directory module to screen CEOs from public companies around the world.
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