Correlation Between TCC Steel and Haitai Confectionery

Can any of the company-specific risk be diversified away by investing in both TCC Steel and Haitai Confectionery 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 TCC Steel and Haitai Confectionery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TCC Steel Corp and Haitai Confectionery Foods, you can compare the effects of market volatilities on TCC Steel and Haitai Confectionery 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 TCC Steel with a short position of Haitai Confectionery. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCC Steel and Haitai Confectionery.

Diversification Opportunities for TCC Steel and Haitai Confectionery

-0.4

Correlation Coefficient

TCC Steel  Haitai Confectionery

Very good diversification

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

Pair Corralation between TCC Steel and Haitai Confectionery

Assuming the 90 days trading horizon TCC Steel Corp is expected to under-perform the Haitai Confectionery. In addition to that, TCC Steel is 1.92 times more volatile than Haitai Confectionery Foods. It trades about -0.02 of its total potential returns per unit of risk. Haitai Confectionery Foods is currently generating about 0.3 per unit of volatility. If you would invest  556,804  in Haitai Confectionery Foods on October 11, 2024 and sell it today you would earn a total of  53,196  from holding Haitai Confectionery Foods or generate 9.55% return on investment over 90 days.

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

TCC Steel Corp  vs.  Haitai Confectionery Foods

TCC Steel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TCC Steel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Haitai Confectionery

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haitai Confectionery Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haitai Confectionery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TCC Steel and Haitai Confectionery

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

The idea behind TCC Steel Corp and Haitai Confectionery Foods 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..