Correlation Between Sinbon Electronics and Tong Hsing

Can any of the company-specific risk be diversified away by investing in both Sinbon Electronics and Tong Hsing 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 Sinbon Electronics and Tong Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sinbon Electronics Co and Tong Hsing Electronic, you can compare the effects of market volatilities on Sinbon Electronics and Tong Hsing 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 Sinbon Electronics with a short position of Tong Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinbon Electronics and Tong Hsing.

Diversification Opportunities for Sinbon Electronics and Tong Hsing

0.86

Correlation Coefficient

Sinbon Electronics  Tong Hsing

Very poor diversification

The 3 months correlation between Sinbon and Tong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sinbon Electronics Co and Tong Hsing Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hsing Electronic and Sinbon Electronics 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 Sinbon Electronics Co are associated (or correlated) with Tong Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hsing Electronic has no effect on the direction of Sinbon Electronics i.e., Sinbon Electronics and Tong Hsing go up and down completely randomly.

Pair Corralation between Sinbon Electronics and Tong Hsing

Assuming the 90 days trading horizon Sinbon Electronics Co is expected to under-perform the Tong Hsing. But the stock apears to be less risky and, when comparing its historical volatility, Sinbon Electronics Co is 1.03 times less risky than Tong Hsing. The stock trades about -0.14 of its potential returns per unit of risk. The Tong Hsing Electronic is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  14,000  in Tong Hsing Electronic on September 2, 2024 and sell it today you would lose (1,100) from holding Tong Hsing Electronic or give up 7.86% of portfolio value over 90 days.

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

Sinbon Electronics Co  vs.  Tong Hsing Electronic

Sinbon Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinbon Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Tong Hsing Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tong Hsing Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sinbon Electronics and Tong Hsing

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

The idea behind Sinbon Electronics Co and Tong Hsing Electronic 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .