Correlation Between Tomei Consolidated and Hengyuan Refining
Can any of the company-specific risk be diversified away by investing in both Tomei Consolidated and Hengyuan Refining 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 Tomei Consolidated and Hengyuan Refining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tomei Consolidated Bhd and Hengyuan Refining, you can compare the effects of market volatilities on Tomei Consolidated and Hengyuan Refining 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 Tomei Consolidated with a short position of Hengyuan Refining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tomei Consolidated and Hengyuan Refining.
Diversification Opportunities for Tomei Consolidated and Hengyuan Refining
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tomei and Hengyuan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tomei Consolidated Bhd and Hengyuan Refining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengyuan Refining and Tomei Consolidated 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 Tomei Consolidated Bhd are associated (or correlated) with Hengyuan Refining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengyuan Refining has no effect on the direction of Tomei Consolidated i.e., Tomei Consolidated and Hengyuan Refining go up and down completely randomly.
Pair Corralation between Tomei Consolidated and Hengyuan Refining
Assuming the 90 days trading horizon Tomei Consolidated Bhd is expected to generate 1.02 times more return on investment than Hengyuan Refining. However, Tomei Consolidated is 1.02 times more volatile than Hengyuan Refining. It trades about -0.39 of its potential returns per unit of risk. Hengyuan Refining is currently generating about -0.41 per unit of risk. If you would invest 170.00 in Tomei Consolidated Bhd on August 30, 2024 and sell it today you would lose (26.00) from holding Tomei Consolidated Bhd or give up 15.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tomei Consolidated Bhd vs. Hengyuan Refining
Performance |
| Timeline |
| Tomei Consolidated Bhd |
| Hengyuan Refining |
Tomei Consolidated and Hengyuan Refining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tomei Consolidated and Hengyuan Refining
The main advantage of trading using opposite Tomei Consolidated and Hengyuan Refining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tomei Consolidated position performs unexpectedly, Hengyuan Refining 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 Hengyuan Refining will offset losses from the drop in Hengyuan Refining's long position.| Tomei Consolidated vs. Malayan Banking Bhd | Tomei Consolidated vs. Public Bank Bhd | Tomei Consolidated vs. Petronas Chemicals Group | Tomei Consolidated vs. IHH Healthcare Bhd |
| Hengyuan Refining vs. Apex Healthcare Bhd | Hengyuan Refining vs. Diversified Gateway Solutions | Hengyuan Refining vs. Binasat Communications Bhd | Hengyuan Refining vs. Media Prima Bhd |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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