Correlation Between TWOWAY Communications and Yong Shun
Can any of the company-specific risk be diversified away by investing in both TWOWAY Communications and Yong Shun 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 Yong Shun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TWOWAY Communications and Yong Shun Chemical, you can compare the effects of market volatilities on TWOWAY Communications and Yong Shun 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 Yong Shun. Check out your portfolio center. Please also check ongoing floating volatility patterns of TWOWAY Communications and Yong Shun.
Diversification Opportunities for TWOWAY Communications and Yong Shun
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TWOWAY and Yong is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding TWOWAY Communications and Yong Shun Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Shun Chemical 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 Yong Shun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Shun Chemical has no effect on the direction of TWOWAY Communications i.e., TWOWAY Communications and Yong Shun go up and down completely randomly.
Pair Corralation between TWOWAY Communications and Yong Shun
Assuming the 90 days trading horizon TWOWAY Communications is expected to generate 2.25 times more return on investment than Yong Shun. However, TWOWAY Communications is 2.25 times more volatile than Yong Shun Chemical. It trades about 0.13 of its potential returns per unit of risk. Yong Shun Chemical is currently generating about 0.02 per unit of risk. If you would invest 1,111 in TWOWAY Communications on September 5, 2024 and sell it today you would earn a total of 7,399 from holding TWOWAY Communications or generate 665.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TWOWAY Communications vs. Yong Shun Chemical
Performance |
| Timeline |
| TWOWAY Communications |
| Yong Shun Chemical |
TWOWAY Communications and Yong Shun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TWOWAY Communications and Yong Shun
The main advantage of trading using opposite TWOWAY Communications and Yong Shun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TWOWAY Communications position performs unexpectedly, Yong Shun 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 Yong Shun will offset losses from the drop in Yong Shun's long position.| TWOWAY Communications vs. Accton Technology Corp | TWOWAY Communications vs. Wistron NeWeb Corp | TWOWAY Communications vs. Alpha Networks | TWOWAY Communications vs. Gemtek Technology Co |
| Yong Shun vs. Sunmax Biotechnology Co | Yong Shun vs. Feng Hsin Steel | Yong Shun vs. First Copper Technology | Yong Shun vs. Century Iron And |
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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