Correlation Between FIT Hon and TCL Electronics
Can any of the company-specific risk be diversified away by investing in both FIT Hon and TCL Electronics 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 FIT Hon and TCL Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIT Hon Teng and TCL Electronics Holdings, you can compare the effects of market volatilities on FIT Hon and TCL Electronics 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 FIT Hon with a short position of TCL Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIT Hon and TCL Electronics.
Diversification Opportunities for FIT Hon and TCL Electronics
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIT and TCL is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding FIT Hon Teng and TCL Electronics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCL Electronics Holdings and FIT Hon 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 FIT Hon Teng are associated (or correlated) with TCL Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCL Electronics Holdings has no effect on the direction of FIT Hon i.e., FIT Hon and TCL Electronics go up and down completely randomly.
Pair Corralation between FIT Hon and TCL Electronics
Assuming the 90 days horizon FIT Hon Teng is expected to generate 1.97 times more return on investment than TCL Electronics. However, FIT Hon is 1.97 times more volatile than TCL Electronics Holdings. It trades about 0.09 of its potential returns per unit of risk. TCL Electronics Holdings is currently generating about 0.1 per unit of risk. If you would invest 45.00 in FIT Hon Teng on November 3, 2024 and sell it today you would earn a total of 4.00 from holding FIT Hon Teng or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIT Hon Teng vs. TCL Electronics Holdings
Performance |
| Timeline |
| FIT Hon Teng |
| TCL Electronics Holdings |
FIT Hon and TCL Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIT Hon and TCL Electronics
The main advantage of trading using opposite FIT Hon and TCL Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIT Hon position performs unexpectedly, TCL Electronics 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 TCL Electronics will offset losses from the drop in TCL Electronics' long position.| FIT Hon vs. KULR Technology Group | FIT Hon vs. Ouster, Common Stock | FIT Hon vs. MicroCloud Hologram | FIT Hon vs. Kopin |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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