Correlation Between Tingyi Holding and Sunfon Construction
Can any of the company-specific risk be diversified away by investing in both Tingyi Holding and Sunfon Construction 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 Tingyi Holding and Sunfon Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tingyi Holding Corp and Sunfon Construction Co, you can compare the effects of market volatilities on Tingyi Holding and Sunfon Construction 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 Tingyi Holding with a short position of Sunfon Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tingyi Holding and Sunfon Construction.
Diversification Opportunities for Tingyi Holding and Sunfon Construction
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tingyi and Sunfon is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tingyi Holding Corp and Sunfon Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfon Construction and Tingyi Holding 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 Tingyi Holding Corp are associated (or correlated) with Sunfon Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfon Construction has no effect on the direction of Tingyi Holding i.e., Tingyi Holding and Sunfon Construction go up and down completely randomly.
Pair Corralation between Tingyi Holding and Sunfon Construction
Assuming the 90 days trading horizon Tingyi Holding Corp is expected to under-perform the Sunfon Construction. But the stock apears to be less risky and, when comparing its historical volatility, Tingyi Holding Corp is 1.12 times less risky than Sunfon Construction. The stock trades about -0.03 of its potential returns per unit of risk. The Sunfon Construction Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,820 in Sunfon Construction Co on September 3, 2024 and sell it today you would earn a total of 210.00 from holding Sunfon Construction Co or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tingyi Holding Corp vs. Sunfon Construction Co
Performance |
| Timeline |
| Tingyi Holding Corp |
| Sunfon Construction |
Tingyi Holding and Sunfon Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tingyi Holding and Sunfon Construction
The main advantage of trading using opposite Tingyi Holding and Sunfon Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tingyi Holding position performs unexpectedly, Sunfon Construction 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 Sunfon Construction will offset losses from the drop in Sunfon Construction's long position.| Tingyi Holding vs. Uni President Enterprises Corp | Tingyi Holding vs. President Chain Store | Tingyi Holding vs. Formosa Chemicals Fibre | Tingyi Holding vs. Formosa Petrochemical Corp |
| Sunfon Construction vs. Run Long Construction | Sunfon Construction vs. Chong Hong Construction | Sunfon Construction vs. JSL Construction Development | Sunfon Construction vs. Delpha Construction 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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