Correlation Between Victory New and Tang Eng

Can any of the company-specific risk be diversified away by investing in both Victory New and Tang Eng 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 Victory New and Tang Eng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Victory New Materials and Tang Eng Iron, you can compare the effects of market volatilities on Victory New and Tang Eng 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 Victory New with a short position of Tang Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Tang Eng.

Diversification Opportunities for Victory New and Tang Eng

0.32

Correlation Coefficient

Victory New  Tang Eng

Weak diversification

The 3 months correlation between Victory and Tang is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron and Victory New 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 Victory New Materials are associated (or correlated) with Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of Victory New i.e., Victory New and Tang Eng go up and down completely randomly.

Pair Corralation between Victory New and Tang Eng

Assuming the 90 days trading horizon Victory New is expected to generate 1.07 times less return on investment than Tang Eng. In addition to that, Victory New is 2.38 times more volatile than Tang Eng Iron. It trades about 0.02 of its total potential returns per unit of risk. Tang Eng Iron is currently generating about 0.06 per unit of volatility. If you would invest  3,235  in Tang Eng Iron on September 2, 2024 and sell it today you would earn a total of  80.00  from holding Tang Eng Iron or generate 2.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Victory New Materials  vs.  Tang Eng Iron

Victory New Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Victory New Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Victory New is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tang Eng Iron

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tang Eng Iron are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tang Eng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Victory New and Tang Eng

The main advantage of trading using opposite Victory New and Tang Eng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory New position performs unexpectedly, Tang Eng 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 Tang Eng will offset losses from the drop in Tang Eng's long position.

The idea behind Victory New Materials and Tang Eng Iron pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.