Correlation Between Tung Thih and E Lead

Can any of the company-specific risk be diversified away by investing in both Tung Thih and E Lead 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 Tung Thih and E Lead into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tung Thih and E Lead

-0.58

Correlation Coefficient

Tung Thih  E Lead

Excellent diversification

The 3 months correlation between Tung and 2497 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and E Lead Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Lead Electronic and Tung Thih 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 Tung Thih Electronic are associated (or correlated) with E Lead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Lead Electronic has no effect on the direction of Tung Thih i.e., Tung Thih and E Lead go up and down completely randomly.

Pair Corralation between Tung Thih and E Lead

Assuming the 90 days trading horizon Tung Thih Electronic is expected to generate 1.58 times more return on investment than E Lead. However, Tung Thih is 1.58 times more volatile than E Lead Electronic Co. It trades about 0.13 of its potential returns per unit of risk. E Lead Electronic Co is currently generating about -0.28 per unit of risk. If you would invest  9,010  in Tung Thih Electronic on September 5, 2024 and sell it today you would earn a total of  930.00  from holding Tung Thih Electronic or generate 10.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Tung Thih Electronic  vs.  E Lead Electronic Co

Tung Thih Electronic

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tung Thih Electronic are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tung Thih showed solid returns over the last few months and may actually be approaching a breakup point.

E Lead Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E Lead Electronic 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.

Pair Trading with Tung Thih and E Lead

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

The idea behind Tung Thih Electronic and E Lead Electronic Co 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.