Correlation Between Tong Hsing and Faraday Technology
Can any of the company-specific risk be diversified away by investing in both Tong Hsing and Faraday Technology 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 Tong Hsing and Faraday Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tong Hsing Electronic and Faraday Technology Corp, you can compare the effects of market volatilities on Tong Hsing and Faraday Technology 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 Tong Hsing with a short position of Faraday Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Hsing and Faraday Technology.
Diversification Opportunities for Tong Hsing and Faraday Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tong and Faraday is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hsing Electronic and Faraday Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faraday Technology Corp and Tong Hsing 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 Tong Hsing Electronic are associated (or correlated) with Faraday Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faraday Technology Corp has no effect on the direction of Tong Hsing i.e., Tong Hsing and Faraday Technology go up and down completely randomly.
Pair Corralation between Tong Hsing and Faraday Technology
Assuming the 90 days trading horizon Tong Hsing Electronic is expected to generate 0.78 times more return on investment than Faraday Technology. However, Tong Hsing Electronic is 1.28 times less risky than Faraday Technology. It trades about -0.03 of its potential returns per unit of risk. Faraday Technology Corp is currently generating about -0.09 per unit of risk. 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 | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Tong Hsing Electronic vs. Faraday Technology Corp
Performance |
Timeline |
Tong Hsing Electronic |
Faraday Technology Corp |
Tong Hsing and Faraday Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tong Hsing and Faraday Technology
The main advantage of trading using opposite Tong Hsing and Faraday Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Hsing position performs unexpectedly, Faraday Technology 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 Faraday Technology will offset losses from the drop in Faraday Technology's long position.Tong Hsing vs. Century Wind Power | Tong Hsing vs. Green World Fintech | Tong Hsing vs. Ingentec | Tong Hsing vs. Chaheng Precision Co |
Faraday Technology vs. Century Wind Power | Faraday Technology vs. Green World Fintech | Faraday Technology vs. Ingentec | Faraday Technology vs. Chaheng Precision Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |