Correlation Between TBI Motion and San Shing

Can any of the company-specific risk be diversified away by investing in both TBI Motion and San Shing 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 TBI Motion and San Shing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TBI Motion Technology and San Shing Fastech, you can compare the effects of market volatilities on TBI Motion and San Shing 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 TBI Motion with a short position of San Shing. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBI Motion and San Shing.

Diversification Opportunities for TBI Motion and San Shing

-0.4

Correlation Coefficient

TBI Motion  San Shing

Very good diversification

The 3 months correlation between TBI and San is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding TBI Motion Technology and San Shing Fastech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Shing Fastech and TBI Motion 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 TBI Motion Technology are associated (or correlated) with San Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Shing Fastech has no effect on the direction of TBI Motion i.e., TBI Motion and San Shing go up and down completely randomly.

Pair Corralation between TBI Motion and San Shing

Assuming the 90 days trading horizon TBI Motion Technology is expected to generate 7.26 times more return on investment than San Shing. However, TBI Motion is 7.26 times more volatile than San Shing Fastech. It trades about 0.11 of its potential returns per unit of risk. San Shing Fastech is currently generating about -0.17 per unit of risk. If you would invest  4,270  in TBI Motion Technology on September 23, 2024 and sell it today you would earn a total of  1,100  from holding TBI Motion Technology or generate 25.76% return on investment over 90 days.

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

TBI Motion Technology  vs.  San Shing Fastech

TBI Motion Technology

Risk-Adjusted Performance

8 of 100

OK

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

San Shing Fastech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days San Shing Fastech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, San Shing 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 TBI Motion and San Shing

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

The idea behind TBI Motion Technology and San Shing Fastech 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.