Correlation Between Hong Ho and Thunder Tiger

Can any of the company-specific risk be diversified away by investing in both Hong Ho and Thunder Tiger 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 Hong Ho and Thunder Tiger into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hong Ho Precision and Thunder Tiger Corp, you can compare the effects of market volatilities on Hong Ho and Thunder Tiger 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 Hong Ho with a short position of Thunder Tiger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Ho and Thunder Tiger.

Diversification Opportunities for Hong Ho and Thunder Tiger

-0.29

Correlation Coefficient

Hong Ho  Thunder Tiger

Very good diversification

The 3 months correlation between Hong and Thunder is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hong Ho Precision and Thunder Tiger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Tiger Corp and Hong Ho 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 Hong Ho Precision are associated (or correlated) with Thunder Tiger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Tiger Corp has no effect on the direction of Hong Ho i.e., Hong Ho and Thunder Tiger go up and down completely randomly.

Pair Corralation between Hong Ho and Thunder Tiger

Assuming the 90 days trading horizon Hong Ho Precision is expected to generate 1.26 times more return on investment than Thunder Tiger. However, Hong Ho is 1.26 times more volatile than Thunder Tiger Corp. It trades about 0.09 of its potential returns per unit of risk. Thunder Tiger Corp is currently generating about 0.0 per unit of risk. If you would invest  4,785  in Hong Ho Precision on September 3, 2024 and sell it today you would earn a total of  695.00  from holding Hong Ho Precision or generate 14.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hong Ho Precision  vs.  Thunder Tiger Corp

Hong Ho Precision

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hong Ho Precision are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hong Ho showed solid returns over the last few months and may actually be approaching a breakup point.

Thunder Tiger Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thunder Tiger Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Thunder Tiger 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 Hong Ho and Thunder Tiger

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

The idea behind Hong Ho Precision and Thunder Tiger Corp 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.