Correlation Between Dental Public and Tong Hua
Can any of the company-specific risk be diversified away by investing in both Dental Public and Tong Hua 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 Dental Public and Tong Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dental Public and Tong Hua Holding, you can compare the effects of market volatilities on Dental Public and Tong Hua 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 Dental Public with a short position of Tong Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dental Public and Tong Hua.
Diversification Opportunities for Dental Public and Tong Hua
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dental and Tong is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dental Public and Tong Hua Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hua Holding and Dental Public 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 Dental Public are associated (or correlated) with Tong Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hua Holding has no effect on the direction of Dental Public i.e., Dental Public and Tong Hua go up and down completely randomly.
Pair Corralation between Dental Public and Tong Hua
Given the investment horizon of 90 days Dental Public is expected to generate 0.41 times more return on investment than Tong Hua. However, Dental Public is 2.44 times less risky than Tong Hua. It trades about -0.27 of its potential returns per unit of risk. Tong Hua Holding is currently generating about -0.37 per unit of risk. If you would invest 342.00 in Dental Public on August 26, 2024 and sell it today you would lose (24.00) from holding Dental Public or give up 7.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dental Public vs. Tong Hua Holding
Performance |
| Timeline |
| Dental Public |
| Tong Hua Holding |
Dental Public and Tong Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dental Public and Tong Hua
The main advantage of trading using opposite Dental Public and Tong Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dental Public position performs unexpectedly, Tong Hua 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 Tong Hua will offset losses from the drop in Tong Hua's long position.| Dental Public vs. Humanica Public | Dental Public vs. After You Public | Dental Public vs. Chularat Hospital Public | Dental Public vs. Comanche International Public |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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