Correlation Between TWOWAY Communications and New Asia
Can any of the company-specific risk be diversified away by investing in both TWOWAY Communications and New Asia 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 TWOWAY Communications and New Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TWOWAY Communications and New Asia Construction, you can compare the effects of market volatilities on TWOWAY Communications and New Asia 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 TWOWAY Communications with a short position of New Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TWOWAY Communications and New Asia.
Diversification Opportunities for TWOWAY Communications and New Asia
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TWOWAY and New is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding TWOWAY Communications and New Asia Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Asia Construction and TWOWAY Communications 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 TWOWAY Communications are associated (or correlated) with New Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Asia Construction has no effect on the direction of TWOWAY Communications i.e., TWOWAY Communications and New Asia go up and down completely randomly.
Pair Corralation between TWOWAY Communications and New Asia
Assuming the 90 days trading horizon TWOWAY Communications is expected to generate 1.46 times more return on investment than New Asia. However, TWOWAY Communications is 1.46 times more volatile than New Asia Construction. It trades about 0.12 of its potential returns per unit of risk. New Asia Construction is currently generating about 0.09 per unit of risk. If you would invest 1,101 in TWOWAY Communications on September 12, 2024 and sell it today you would earn a total of 6,839 from holding TWOWAY Communications or generate 621.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TWOWAY Communications vs. New Asia Construction
Performance |
| Timeline |
| TWOWAY Communications |
| New Asia Construction |
TWOWAY Communications and New Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TWOWAY Communications and New Asia
The main advantage of trading using opposite TWOWAY Communications and New Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TWOWAY Communications position performs unexpectedly, New Asia 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 New Asia will offset losses from the drop in New Asia's long position.| TWOWAY Communications vs. Gemtek Technology Co | TWOWAY Communications vs. Ruentex Development Co | TWOWAY Communications vs. WiseChip Semiconductor | TWOWAY Communications vs. Novatek Microelectronics Corp |
| New Asia vs. Yang Ming Marine | New Asia vs. Wan Hai Lines | New Asia vs. U Ming Marine Transport | New Asia vs. Taiwan Navigation 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |