Correlation Between Holiday Entertainment and TMP Steel
Can any of the company-specific risk be diversified away by investing in both Holiday Entertainment and TMP Steel 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 Holiday Entertainment and TMP Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holiday Entertainment Co and TMP Steel, you can compare the effects of market volatilities on Holiday Entertainment and TMP Steel 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 Holiday Entertainment with a short position of TMP Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Entertainment and TMP Steel.
Diversification Opportunities for Holiday Entertainment and TMP Steel
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holiday and TMP is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Entertainment Co and TMP Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMP Steel and Holiday Entertainment 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 Holiday Entertainment Co are associated (or correlated) with TMP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMP Steel has no effect on the direction of Holiday Entertainment i.e., Holiday Entertainment and TMP Steel go up and down completely randomly.
Pair Corralation between Holiday Entertainment and TMP Steel
Assuming the 90 days trading horizon Holiday Entertainment is expected to generate 1.3 times less return on investment than TMP Steel. But when comparing it to its historical volatility, Holiday Entertainment Co is 1.25 times less risky than TMP Steel. It trades about 0.04 of its potential returns per unit of risk. TMP Steel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,139 in TMP Steel on September 5, 2024 and sell it today you would earn a total of 721.00 from holding TMP Steel or generate 33.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holiday Entertainment Co vs. TMP Steel
Performance |
| Timeline |
| Holiday Entertainment |
| TMP Steel |
Holiday Entertainment and TMP Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Entertainment and TMP Steel
The main advantage of trading using opposite Holiday Entertainment and TMP Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Entertainment position performs unexpectedly, TMP Steel 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 TMP Steel will offset losses from the drop in TMP Steel's long position.| Holiday Entertainment vs. Tainan Spinning Co | Holiday Entertainment vs. Chia Her Industrial | Holiday Entertainment vs. WiseChip Semiconductor | Holiday Entertainment vs. Novatek Microelectronics Corp |
| TMP Steel vs. Thunder Tiger Corp | TMP Steel vs. Synmosa Biopharma | TMP Steel vs. Oriental Union Chemical | TMP Steel vs. Ruentex Development 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 Stocks Directory module to find actively traded stocks across global markets.
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