Correlation Between Tong Hsing and Elan Microelectronics
Can any of the company-specific risk be diversified away by investing in both Tong Hsing and Elan Microelectronics 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 Tong Hsing and Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tong Hsing Electronic and Elan Microelectronics Corp, you can compare the effects of market volatilities on Tong Hsing and Elan Microelectronics 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 Tong Hsing with a short position of Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Hsing and Elan Microelectronics.
Diversification Opportunities for Tong Hsing and Elan Microelectronics
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tong and Elan is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hsing Electronic and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics and Tong Hsing 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 Tong Hsing Electronic are associated (or correlated) with Elan Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elan Microelectronics has no effect on the direction of Tong Hsing i.e., Tong Hsing and Elan Microelectronics go up and down completely randomly.
Pair Corralation between Tong Hsing and Elan Microelectronics
Assuming the 90 days trading horizon Tong Hsing Electronic is expected to under-perform the Elan Microelectronics. In addition to that, Tong Hsing is 1.13 times more volatile than Elan Microelectronics Corp. It trades about -0.03 of its total potential returns per unit of risk. Elan Microelectronics Corp is currently generating about 0.07 per unit of volatility. If you would invest 8,427 in Elan Microelectronics Corp on August 30, 2024 and sell it today you would earn a total of 6,323 from holding Elan Microelectronics Corp or generate 75.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tong Hsing Electronic vs. Elan Microelectronics Corp
Performance |
| Timeline |
| Tong Hsing Electronic |
| Elan Microelectronics |
Tong Hsing and Elan Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Hsing and Elan Microelectronics
The main advantage of trading using opposite Tong Hsing and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Hsing position performs unexpectedly, Elan Microelectronics 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 Elan Microelectronics will offset losses from the drop in Elan Microelectronics' long position.| Tong Hsing vs. Kinsus Interconnect Technology | Tong Hsing vs. Unimicron Technology Corp | Tong Hsing vs. Nan Ya Printed | Tong Hsing vs. WIN Semiconductors |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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