Correlation Between Tienlen Steel and Sao Ta
Can any of the company-specific risk be diversified away by investing in both Tienlen Steel and Sao Ta 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 Tienlen Steel and Sao Ta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tienlen Steel Corp and Sao Ta Foods, you can compare the effects of market volatilities on Tienlen Steel and Sao Ta 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 Tienlen Steel with a short position of Sao Ta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and Sao Ta.
Diversification Opportunities for Tienlen Steel and Sao Ta
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tienlen and Sao is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Sao Ta Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sao Ta Foods and Tienlen Steel 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 Tienlen Steel Corp are associated (or correlated) with Sao Ta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sao Ta Foods has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Sao Ta go up and down completely randomly.
Pair Corralation between Tienlen Steel and Sao Ta
Assuming the 90 days trading horizon Tienlen Steel Corp is expected to under-perform the Sao Ta. In addition to that, Tienlen Steel is 1.62 times more volatile than Sao Ta Foods. It trades about -0.59 of its total potential returns per unit of risk. Sao Ta Foods is currently generating about 0.13 per unit of volatility. If you would invest 4,570,000 in Sao Ta Foods on August 29, 2024 and sell it today you would earn a total of 105,000 from holding Sao Ta Foods or generate 2.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tienlen Steel Corp vs. Sao Ta Foods
Performance |
Timeline |
Tienlen Steel Corp |
Sao Ta Foods |
Tienlen Steel and Sao Ta Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tienlen Steel and Sao Ta
The main advantage of trading using opposite Tienlen Steel and Sao Ta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tienlen Steel position performs unexpectedly, Sao Ta 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 Sao Ta will offset losses from the drop in Sao Ta's long position.Tienlen Steel vs. FIT INVEST JSC | Tienlen Steel vs. Damsan JSC | Tienlen Steel vs. An Phat Plastic | Tienlen Steel vs. APG Securities Joint |
Sao Ta vs. FIT INVEST JSC | Sao Ta vs. Damsan JSC | Sao Ta vs. An Phat Plastic | Sao Ta vs. APG Securities Joint |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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