Correlation Between Tehmag Foods and Sun Sea

Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and Sun Sea 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 Tehmag Foods and Sun Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tehmag Foods and Sun Sea Construction, you can compare the effects of market volatilities on Tehmag Foods and Sun Sea 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 Tehmag Foods with a short position of Sun Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and Sun Sea.

Diversification Opportunities for Tehmag Foods and Sun Sea

0.73

Correlation Coefficient

Tehmag Foods  Sun Sea

Poor diversification

The 3 months correlation between Tehmag and Sun is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and Sun Sea Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Sea Construction and Tehmag Foods 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 Tehmag Foods are associated (or correlated) with Sun Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Sea Construction has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and Sun Sea go up and down completely randomly.

Pair Corralation between Tehmag Foods and Sun Sea

Assuming the 90 days trading horizon Tehmag Foods is expected to generate 0.27 times more return on investment than Sun Sea. However, Tehmag Foods is 3.73 times less risky than Sun Sea. It trades about -0.06 of its potential returns per unit of risk. Sun Sea Construction is currently generating about -0.08 per unit of risk. If you would invest  31,600  in Tehmag Foods on September 19, 2024 and sell it today you would lose (500.00) from holding Tehmag Foods or give up 1.58% of portfolio value over 90 days.

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

Tehmag Foods  vs.  Sun Sea Construction

Tehmag Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tehmag Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tehmag Foods is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sun Sea Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Sea Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Tehmag Foods and Sun Sea

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

The idea behind Tehmag Foods and Sun Sea Construction 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.