Correlation Between TechPrecision Common and Deswell Industries
Can any of the company-specific risk be diversified away by investing in both TechPrecision Common and Deswell Industries 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 TechPrecision Common and Deswell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechPrecision Common and Deswell Industries, you can compare the effects of market volatilities on TechPrecision Common and Deswell Industries 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 TechPrecision Common with a short position of Deswell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechPrecision Common and Deswell Industries.
Diversification Opportunities for TechPrecision Common and Deswell Industries
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TechPrecision and Deswell is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding TechPrecision Common and Deswell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deswell Industries and TechPrecision Common 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 TechPrecision Common are associated (or correlated) with Deswell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deswell Industries has no effect on the direction of TechPrecision Common i.e., TechPrecision Common and Deswell Industries go up and down completely randomly.
Pair Corralation between TechPrecision Common and Deswell Industries
Given the investment horizon of 90 days TechPrecision Common is expected to under-perform the Deswell Industries. In addition to that, TechPrecision Common is 2.02 times more volatile than Deswell Industries. It trades about -0.02 of its total potential returns per unit of risk. Deswell Industries is currently generating about 0.03 per unit of volatility. If you would invest 237.00 in Deswell Industries on August 31, 2024 and sell it today you would earn a total of 35.00 from holding Deswell Industries or generate 14.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
TechPrecision Common vs. Deswell Industries
Performance |
| Timeline |
| TechPrecision Common |
| Deswell Industries |
TechPrecision Common and Deswell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechPrecision Common and Deswell Industries
The main advantage of trading using opposite TechPrecision Common and Deswell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechPrecision Common position performs unexpectedly, Deswell Industries 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 Deswell Industries will offset losses from the drop in Deswell Industries' long position.| TechPrecision Common vs. Deswell Industries | TechPrecision Common vs. Euro Tech Holdings | TechPrecision Common vs. China Natural Resources | TechPrecision Common vs. Arts Way Manufacturing Co |
| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. Micropac Industries | Deswell Industries vs. SigmaTron International |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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