Correlation Between Sunny Friend and Tang Eng
Can any of the company-specific risk be diversified away by investing in both Sunny Friend and Tang Eng 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 Sunny Friend and Tang Eng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Friend Environmental and Tang Eng Iron, you can compare the effects of market volatilities on Sunny Friend and Tang Eng 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 Sunny Friend with a short position of Tang Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Friend and Tang Eng.
Diversification Opportunities for Sunny Friend and Tang Eng
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sunny and Tang is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron and Sunny Friend 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 Sunny Friend Environmental are associated (or correlated) with Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of Sunny Friend i.e., Sunny Friend and Tang Eng go up and down completely randomly.
Pair Corralation between Sunny Friend and Tang Eng
Assuming the 90 days trading horizon Sunny Friend Environmental is expected to under-perform the Tang Eng. In addition to that, Sunny Friend is 2.61 times more volatile than Tang Eng Iron. It trades about -0.02 of its total potential returns per unit of risk. Tang Eng Iron is currently generating about 0.02 per unit of volatility. If you would invest 3,275 in Tang Eng Iron on September 1, 2024 and sell it today you would earn a total of 40.00 from holding Tang Eng Iron or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Friend Environmental vs. Tang Eng Iron
Performance |
| Timeline |
| Sunny Friend Environ |
| Tang Eng Iron |
Sunny Friend and Tang Eng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Friend and Tang Eng
The main advantage of trading using opposite Sunny Friend and Tang Eng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Friend position performs unexpectedly, Tang Eng 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 Tang Eng will offset losses from the drop in Tang Eng's long position.| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
| Tang Eng vs. Basso Industry Corp | Tang Eng vs. Chung Hsin Electric Machinery | Tang Eng vs. TYC Brother Industrial | Tang Eng vs. TECO Electric Machinery |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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