Correlation Between Ten Ren and Taisun Enterprise
Can any of the company-specific risk be diversified away by investing in both Ten Ren and Taisun Enterprise 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 Ten Ren and Taisun Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ten Ren Tea and Taisun Enterprise Co, you can compare the effects of market volatilities on Ten Ren and Taisun Enterprise 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 Ten Ren with a short position of Taisun Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ten Ren and Taisun Enterprise.
Diversification Opportunities for Ten Ren and Taisun Enterprise
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ten and Taisun is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ten Ren Tea and Taisun Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taisun Enterprise and Ten Ren 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 Ten Ren Tea are associated (or correlated) with Taisun Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taisun Enterprise has no effect on the direction of Ten Ren i.e., Ten Ren and Taisun Enterprise go up and down completely randomly.
Pair Corralation between Ten Ren and Taisun Enterprise
Assuming the 90 days trading horizon Ten Ren Tea is expected to under-perform the Taisun Enterprise. In addition to that, Ten Ren is 1.15 times more volatile than Taisun Enterprise Co. It trades about -0.05 of its total potential returns per unit of risk. Taisun Enterprise Co is currently generating about 0.04 per unit of volatility. If you would invest 2,025 in Taisun Enterprise Co on September 13, 2024 and sell it today you would earn a total of 40.00 from holding Taisun Enterprise Co or generate 1.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.41% |
Values | Daily Returns |
Ten Ren Tea vs. Taisun Enterprise Co
Performance |
Timeline |
Ten Ren Tea |
Taisun Enterprise |
Ten Ren and Taisun Enterprise Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ten Ren and Taisun Enterprise
The main advantage of trading using opposite Ten Ren and Taisun Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ten Ren position performs unexpectedly, Taisun Enterprise 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 Taisun Enterprise will offset losses from the drop in Taisun Enterprise's long position.Ten Ren vs. Standard Foods Corp | Ten Ren vs. TTET Union Corp | Ten Ren vs. Great Wall Enterprise | Ten Ren vs. Lian Hwa Foods |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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