Correlation Between Tah Hsin and Universal

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

By analyzing existing cross correlation between Tah Hsin Industrial and Universal, you can compare the effects of market volatilities on Tah Hsin and Universal 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 Tah Hsin with a short position of Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tah Hsin and Universal.

Diversification Opportunities for Tah Hsin and Universal

-0.75

Correlation Coefficient

Tah Hsin  Universal

Pay attention - limited upside

The 3 months correlation between Tah and Universal is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tah Hsin Industrial and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal and Tah Hsin 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 Tah Hsin Industrial are associated (or correlated) with Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Tah Hsin i.e., Tah Hsin and Universal go up and down completely randomly.

Pair Corralation between Tah Hsin and Universal

Assuming the 90 days trading horizon Tah Hsin is expected to generate 30.61 times less return on investment than Universal. But when comparing it to its historical volatility, Tah Hsin Industrial is 6.92 times less risky than Universal. It trades about 0.02 of its potential returns per unit of risk. Universal is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,520  in Universal on December 25, 2024 and sell it today you would earn a total of  310.00  from holding Universal or generate 12.3% return on investment over 90 days.

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

Tah Hsin Industrial  vs.  Universal

Tah Hsin Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tah Hsin Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tah Hsin is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Universal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Universal showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tah Hsin and Universal

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

The idea behind Tah Hsin Industrial and Universal 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.