Correlation Between China Tianying and TongFu Microelectronics

Can any of the company-specific risk be diversified away by investing in both China Tianying and TongFu Microelectronics 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 China Tianying and TongFu Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Tianying and TongFu Microelectronics Co, you can compare the effects of market volatilities on China Tianying and TongFu Microelectronics 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 China Tianying with a short position of TongFu Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Tianying and TongFu Microelectronics.

Diversification Opportunities for China Tianying and TongFu Microelectronics

0.0

Correlation Coefficient

China Tianying  TongFu Microelectronics

Pay attention - limited upside

The 3 months correlation between China and TongFu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Tianying and TongFu Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TongFu Microelectronics and China Tianying 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 China Tianying are associated (or correlated) with TongFu Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TongFu Microelectronics has no effect on the direction of China Tianying i.e., China Tianying and TongFu Microelectronics go up and down completely randomly.

Pair Corralation between China Tianying and TongFu Microelectronics

If you would invest  1,923  in TongFu Microelectronics Co on October 24, 2024 and sell it today you would earn a total of  964.00  from holding TongFu Microelectronics Co or generate 50.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

China Tianying  vs.  TongFu Microelectronics Co

China Tianying

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Tianying has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Tianying is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TongFu Microelectronics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TongFu Microelectronics Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TongFu Microelectronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Tianying and TongFu Microelectronics

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

The idea behind China Tianying and TongFu Microelectronics 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.