Correlation Between TTET Union and Shin Tai

Can any of the company-specific risk be diversified away by investing in both TTET Union and Shin Tai 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 TTET Union and Shin Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TTET Union Corp and Shin Tai Industry, you can compare the effects of market volatilities on TTET Union and Shin Tai 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 TTET Union with a short position of Shin Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of TTET Union and Shin Tai.

Diversification Opportunities for TTET Union and Shin Tai

0.58

Correlation Coefficient

TTET Union  Shin Tai

Very weak diversification

The 3 months correlation between TTET and Shin is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding TTET Union Corp and Shin Tai Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Tai Industry and TTET Union 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 TTET Union Corp are associated (or correlated) with Shin Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Tai Industry has no effect on the direction of TTET Union i.e., TTET Union and Shin Tai go up and down completely randomly.

Pair Corralation between TTET Union and Shin Tai

Assuming the 90 days trading horizon TTET Union is expected to generate 7.61 times less return on investment than Shin Tai. But when comparing it to its historical volatility, TTET Union Corp is 4.48 times less risky than Shin Tai. It trades about 0.1 of its potential returns per unit of risk. Shin Tai Industry is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7,610  in Shin Tai Industry on December 28, 2024 and sell it today you would earn a total of  2,540  from holding Shin Tai Industry or generate 33.38% return on investment over 90 days.

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

TTET Union Corp  vs.  Shin Tai Industry

TTET Union Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TTET Union Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, TTET Union is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shin Tai Industry

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Tai Industry are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shin Tai showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TTET Union and Shin Tai

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

The idea behind TTET Union Corp and Shin Tai Industry 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.