Correlation Between Tong Hua and Thai Wah
Can any of the company-specific risk be diversified away by investing in both Tong Hua and Thai Wah 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 Tong Hua and Thai Wah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tong Hua Holding and Thai Wah Public, you can compare the effects of market volatilities on Tong Hua and Thai Wah 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 Tong Hua with a short position of Thai Wah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Hua and Thai Wah.
Diversification Opportunities for Tong Hua and Thai Wah
Almost no diversification
The 3 months correlation between Tong and Thai is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hua Holding and Thai Wah Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Wah Public and Tong Hua 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 Tong Hua Holding are associated (or correlated) with Thai Wah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Wah Public has no effect on the direction of Tong Hua i.e., Tong Hua and Thai Wah go up and down completely randomly.
Pair Corralation between Tong Hua and Thai Wah
Assuming the 90 days horizon Tong Hua Holding is expected to under-perform the Thai Wah. In addition to that, Tong Hua is 2.37 times more volatile than Thai Wah Public. It trades about -0.25 of its total potential returns per unit of risk. Thai Wah Public is currently generating about -0.3 per unit of volatility. If you would invest 324.00 in Thai Wah Public on September 14, 2024 and sell it today you would lose (28.00) from holding Thai Wah Public or give up 8.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tong Hua Holding vs. Thai Wah Public
Performance |
| Timeline |
| Tong Hua Holding |
| Thai Wah Public |
Tong Hua and Thai Wah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Hua and Thai Wah
The main advantage of trading using opposite Tong Hua and Thai Wah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Hua position performs unexpectedly, Thai Wah 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 Thai Wah will offset losses from the drop in Thai Wah's long position.| Tong Hua vs. Synnex Public | Tong Hua vs. SVI Public | Tong Hua vs. Interlink Communication Public | Tong Hua vs. The Erawan Group |
| Thai Wah vs. Charan Insurance Public | Thai Wah vs. AIM Industrial Growth | Thai Wah vs. Thai Life Insurance | Thai Wah vs. Ingress Industrial Public |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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