Correlation Between Tai Tung and Higher Way
Can any of the company-specific risk be diversified away by investing in both Tai Tung and Higher Way 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 Tai Tung and Higher Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tai Tung Communication and Higher Way Electronic, you can compare the effects of market volatilities on Tai Tung and Higher Way 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 Tai Tung with a short position of Higher Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tai Tung and Higher Way.
Diversification Opportunities for Tai Tung and Higher Way
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tai and Higher is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tai Tung Communication and Higher Way Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Higher Way Electronic and Tai Tung 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 Tai Tung Communication are associated (or correlated) with Higher Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Higher Way Electronic has no effect on the direction of Tai Tung i.e., Tai Tung and Higher Way go up and down completely randomly.
Pair Corralation between Tai Tung and Higher Way
Assuming the 90 days trading horizon Tai Tung Communication is expected to under-perform the Higher Way. But the stock apears to be less risky and, when comparing its historical volatility, Tai Tung Communication is 1.68 times less risky than Higher Way. The stock trades about -0.39 of its potential returns per unit of risk. The Higher Way Electronic is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,485 in Higher Way Electronic on October 9, 2024 and sell it today you would lose (30.00) from holding Higher Way Electronic or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tai Tung Communication vs. Higher Way Electronic
Performance |
| Timeline |
| Tai Tung Communication |
| Higher Way Electronic |
Tai Tung and Higher Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tai Tung and Higher Way
The main advantage of trading using opposite Tai Tung and Higher Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tai Tung position performs unexpectedly, Higher Way 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 Higher Way will offset losses from the drop in Higher Way's long position.| Tai Tung vs. Zinwell | Tai Tung vs. Mercuries Life Insurance | Tai Tung vs. Darwin Precisions Corp | Tai Tung vs. Jinli Group Holdings |
| Higher Way vs. Cameo Communications | Higher Way vs. Lien Chang Electronic | Higher Way vs. WT Microelectronics Co | Higher Way vs. Newretail Co |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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