Correlation Between Tong Hsing and Sino American
Can any of the company-specific risk be diversified away by investing in both Tong Hsing and Sino American 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 Sino American 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 Sino American Silicon Products, you can compare the effects of market volatilities on Tong Hsing and Sino American 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 Sino American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Hsing and Sino American.
Diversification Opportunities for Tong Hsing and Sino American
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tong and Sino is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hsing Electronic and Sino American Silicon Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino American Silicon 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 Sino American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino American Silicon has no effect on the direction of Tong Hsing i.e., Tong Hsing and Sino American go up and down completely randomly.
Pair Corralation between Tong Hsing and Sino American
Assuming the 90 days trading horizon Tong Hsing Electronic is expected to generate 1.22 times more return on investment than Sino American. However, Tong Hsing is 1.22 times more volatile than Sino American Silicon Products. It trades about -0.05 of its potential returns per unit of risk. Sino American Silicon Products is currently generating about -0.14 per unit of risk. If you would invest 15,250 in Tong Hsing Electronic on September 1, 2024 and sell it today you would lose (2,350) from holding Tong Hsing Electronic or give up 15.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Tong Hsing Electronic vs. Sino American Silicon Products
Performance |
| Timeline |
| Tong Hsing Electronic |
| Sino American Silicon |
Tong Hsing and Sino American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Hsing and Sino American
The main advantage of trading using opposite Tong Hsing and Sino American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Hsing position performs unexpectedly, Sino American 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 Sino American will offset losses from the drop in Sino American's long position.The idea behind Tong Hsing Electronic and Sino American Silicon Products pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sino American vs. Powertech Technology | Sino American vs. Formosa Sumco Technology | Sino American vs. Radiant Opto Electronics Corp | Sino American vs. Faraday Technology 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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