Correlation Between Tah Tong and Tung Ho

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

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

Diversification Opportunities for Tah Tong and Tung Ho

-0.59

Correlation Coefficient

Tah Tong  Tung Ho

Excellent diversification

The 3 months correlation between Tah and Tung is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tah Tong Textile and Tung Ho Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Ho Textile and Tah Tong 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 Tong Textile are associated (or correlated) with Tung Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Ho Textile has no effect on the direction of Tah Tong i.e., Tah Tong and Tung Ho go up and down completely randomly.

Pair Corralation between Tah Tong and Tung Ho

Assuming the 90 days trading horizon Tah Tong Textile is expected to generate 2.44 times more return on investment than Tung Ho. However, Tah Tong is 2.44 times more volatile than Tung Ho Textile. It trades about 0.04 of its potential returns per unit of risk. Tung Ho Textile is currently generating about 0.05 per unit of risk. If you would invest  794.00  in Tah Tong Textile on October 21, 2024 and sell it today you would earn a total of  551.00  from holding Tah Tong Textile or generate 69.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Tah Tong Textile  vs.  Tung Ho Textile

Tah Tong Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tah Tong Textile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Tung Ho Textile

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tung Ho Textile are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tung Ho may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tah Tong and Tung Ho

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

The idea behind Tah Tong Textile and Tung Ho Textile 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.