Correlation Between TCL Electronics and Sharp Corp
Can any of the company-specific risk be diversified away by investing in both TCL Electronics and Sharp Corp 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 TCL Electronics and Sharp Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TCL Electronics Holdings and Sharp Corp ADR, you can compare the effects of market volatilities on TCL Electronics and Sharp Corp 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 TCL Electronics with a short position of Sharp Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCL Electronics and Sharp Corp.
Diversification Opportunities for TCL Electronics and Sharp Corp
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TCL and Sharp is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding TCL Electronics Holdings and Sharp Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp Corp ADR and TCL Electronics 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 TCL Electronics Holdings are associated (or correlated) with Sharp Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp Corp ADR has no effect on the direction of TCL Electronics i.e., TCL Electronics and Sharp Corp go up and down completely randomly.
Pair Corralation between TCL Electronics and Sharp Corp
Assuming the 90 days horizon TCL Electronics Holdings is expected to generate 2.04 times more return on investment than Sharp Corp. However, TCL Electronics is 2.04 times more volatile than Sharp Corp ADR. It trades about 0.24 of its potential returns per unit of risk. Sharp Corp ADR is currently generating about -0.01 per unit of risk. If you would invest 93.00 in TCL Electronics Holdings on December 30, 2024 and sell it today you would earn a total of 24.00 from holding TCL Electronics Holdings or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TCL Electronics Holdings vs. Sharp Corp ADR
Performance |
| Timeline |
| TCL Electronics Holdings |
| Sharp Corp ADR |
TCL Electronics and Sharp Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TCL Electronics and Sharp Corp
The main advantage of trading using opposite TCL Electronics and Sharp Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TCL Electronics position performs unexpectedly, Sharp Corp 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 Sharp Corp will offset losses from the drop in Sharp Corp's long position.| TCL Electronics vs. PT Astra International | ||
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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