Correlation Between Tong Hsing and Generalplus Technology
Can any of the company-specific risk be diversified away by investing in both Tong Hsing and Generalplus Technology 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 Generalplus Technology 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 Generalplus Technology, you can compare the effects of market volatilities on Tong Hsing and Generalplus Technology 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 Generalplus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Hsing and Generalplus Technology.
Diversification Opportunities for Tong Hsing and Generalplus Technology
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tong and Generalplus is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hsing Electronic and Generalplus Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generalplus Technology 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 Generalplus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generalplus Technology has no effect on the direction of Tong Hsing i.e., Tong Hsing and Generalplus Technology go up and down completely randomly.
Pair Corralation between Tong Hsing and Generalplus Technology
Assuming the 90 days trading horizon Tong Hsing Electronic is expected to under-perform the Generalplus Technology. In addition to that, Tong Hsing is 1.19 times more volatile than Generalplus Technology. It trades about -0.04 of its total potential returns per unit of risk. Generalplus Technology is currently generating about 0.01 per unit of volatility. If you would invest 4,850 in Generalplus Technology on September 4, 2024 and sell it today you would earn a total of 180.00 from holding Generalplus Technology or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Tong Hsing Electronic vs. Generalplus Technology
Performance |
| Timeline |
| Tong Hsing Electronic |
| Generalplus Technology |
Tong Hsing and Generalplus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Hsing and Generalplus Technology
The main advantage of trading using opposite Tong Hsing and Generalplus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Hsing position performs unexpectedly, Generalplus Technology 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 Generalplus Technology will offset losses from the drop in Generalplus Technology's long position.| Tong Hsing vs. Taiwan Semiconductor Manufacturing | Tong Hsing vs. Yang Ming Marine | Tong Hsing vs. AU Optronics | Tong Hsing vs. Innolux Corp |
| Generalplus Technology vs. Taiwan Semiconductor Manufacturing | Generalplus Technology vs. Yang Ming Marine | Generalplus Technology vs. AU Optronics | Generalplus Technology vs. Innolux 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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