Correlation Between Eagle Cold and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Eagle Cold and Tehmag Foods 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 Eagle Cold and Tehmag Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Cold Storage and Tehmag Foods, you can compare the effects of market volatilities on Eagle Cold and Tehmag Foods 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 Eagle Cold with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Cold and Tehmag Foods.
Diversification Opportunities for Eagle Cold and Tehmag Foods
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and Tehmag is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Cold Storage and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and Eagle Cold 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 Eagle Cold Storage are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Eagle Cold i.e., Eagle Cold and Tehmag Foods go up and down completely randomly.
Pair Corralation between Eagle Cold and Tehmag Foods
Assuming the 90 days trading horizon Eagle Cold Storage is expected to under-perform the Tehmag Foods. In addition to that, Eagle Cold is 3.9 times more volatile than Tehmag Foods. It trades about -0.1 of its total potential returns per unit of risk. Tehmag Foods is currently generating about -0.09 per unit of volatility. If you would invest 30,600 in Tehmag Foods on August 31, 2024 and sell it today you would lose (250.00) from holding Tehmag Foods or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Cold Storage vs. Tehmag Foods
Performance |
| Timeline |
| Eagle Cold Storage |
| Tehmag Foods |
Eagle Cold and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Cold and Tehmag Foods
The main advantage of trading using opposite Eagle Cold and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Cold position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.| Eagle Cold vs. Uni President Enterprises Corp | Eagle Cold vs. Tingyi Holding Corp | Eagle Cold vs. Lien Hwa Industrial | Eagle Cold vs. Great Wall Enterprise |
| Tehmag Foods vs. Uni President Enterprises Corp | Tehmag Foods vs. Tingyi Holding Corp | Tehmag Foods vs. Lien Hwa Industrial | Tehmag Foods vs. Great Wall Enterprise |
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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