Correlation Between Sino American and Tong Hsing
Can any of the company-specific risk be diversified away by investing in both Sino American 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 Sino American and Tong Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino American Silicon Products and Tong Hsing Electronic, you can compare the effects of market volatilities on Sino American 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 Sino American with a short position of Tong Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and Tong Hsing.
Diversification Opportunities for Sino American and Tong Hsing
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sino and Tong is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Silicon Products 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 Sino American 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 Sino American Silicon Products 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 Sino American i.e., Sino American and Tong Hsing go up and down completely randomly.
Pair Corralation between Sino American and Tong Hsing
Assuming the 90 days trading horizon Sino American Silicon Products is expected to under-perform the Tong Hsing. But the stock apears to be less risky and, when comparing its historical volatility, Sino American Silicon Products is 1.03 times less risky than Tong Hsing. The stock trades about -0.24 of its potential returns per unit of risk. The Tong Hsing Electronic is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 14,150 in Tong Hsing Electronic on September 23, 2024 and sell it today you would lose (600.00) from holding Tong Hsing Electronic or give up 4.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sino American Silicon Products vs. Tong Hsing Electronic
Performance |
Timeline |
Sino American Silicon |
Tong Hsing Electronic |
Sino American and Tong Hsing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sino American and Tong Hsing
The main advantage of trading using opposite Sino American and Tong Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino American 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.Sino American vs. Formosa Sumco Technology | Sino American vs. Radiant Opto Electronics Corp | Sino American vs. Faraday Technology Corp | Sino American vs. Tong Hsing Electronic |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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