Correlation Between TCL Electronics and Sony Corp
Can any of the company-specific risk be diversified away by investing in both TCL Electronics and Sony 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 Sony 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 Sony Corp, you can compare the effects of market volatilities on TCL Electronics and Sony 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 Sony Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCL Electronics and Sony Corp.
Diversification Opportunities for TCL Electronics and Sony Corp
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TCL and Sony is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding TCL Electronics Holdings and Sony Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Corp 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 Sony Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Corp has no effect on the direction of TCL Electronics i.e., TCL Electronics and Sony Corp go up and down completely randomly.
Pair Corralation between TCL Electronics and Sony Corp
Assuming the 90 days horizon TCL Electronics Holdings is expected to under-perform the Sony Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, TCL Electronics Holdings is 1.02 times less risky than Sony Corp. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Sony Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,774 in Sony Corp on August 23, 2024 and sell it today you would earn a total of 26.00 from holding Sony Corp or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TCL Electronics Holdings vs. Sony Corp
Performance |
| Timeline |
| TCL Electronics Holdings |
| Sony Corp |
TCL Electronics and Sony Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TCL Electronics and Sony Corp
The main advantage of trading using opposite TCL Electronics and Sony Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TCL Electronics position performs unexpectedly, Sony 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 Sony Corp will offset losses from the drop in Sony Corp's long position.| TCL Electronics vs. PT Astra International | TCL Electronics vs. FIT Hon Teng | TCL Electronics vs. WH Group Limited | TCL Electronics vs. Thai Beverage Public |
| Sony Corp vs. LG Display Co | Sony Corp vs. Sonos Inc | Sony Corp vs. Vizio Holding Corp | Sony Corp vs. TCL Electronics Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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