Correlation Between Tah Tong and Carnival Industrial

Can any of the company-specific risk be diversified away by investing in both Tah Tong and Carnival Industrial 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 Carnival Industrial 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 Carnival Industrial Corp, you can compare the effects of market volatilities on Tah Tong and Carnival Industrial 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 Carnival Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tah Tong and Carnival Industrial.

Diversification Opportunities for Tah Tong and Carnival Industrial

0.8

Correlation Coefficient

Tah Tong  Carnival Industrial

Very poor diversification

The 3 months correlation between Tah and Carnival is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tah Tong Textile and Carnival Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Industrial Corp 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 Carnival Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Industrial Corp has no effect on the direction of Tah Tong i.e., Tah Tong and Carnival Industrial go up and down completely randomly.

Pair Corralation between Tah Tong and Carnival Industrial

Assuming the 90 days trading horizon Tah Tong Textile is expected to under-perform the Carnival Industrial. In addition to that, Tah Tong is 2.23 times more volatile than Carnival Industrial Corp. It trades about -0.18 of its total potential returns per unit of risk. Carnival Industrial Corp is currently generating about -0.21 per unit of volatility. If you would invest  1,020  in Carnival Industrial Corp on October 10, 2024 and sell it today you would lose (72.00) from holding Carnival Industrial Corp or give up 7.06% of portfolio value over 90 days.

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

Tah Tong Textile  vs.  Carnival Industrial Corp

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.

Carnival Industrial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnival Industrial Corp 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 Tah Tong and Carnival Industrial

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

The idea behind Tah Tong Textile and Carnival Industrial Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.