Correlation Between Hua Eng and Ta Ya

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

By analyzing existing cross correlation between Hua Eng Wire and Ta Ya Electric, you can compare the effects of market volatilities on Hua Eng and Ta Ya 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 Hua Eng with a short position of Ta Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Eng and Ta Ya.

Diversification Opportunities for Hua Eng and Ta Ya

0.96

Correlation Coefficient

Hua Eng  Ta Ya

Almost no diversification

The 3 months correlation between Hua and 1609 is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hua Eng Wire and Ta Ya Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Ya Electric and Hua Eng 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 Hua Eng Wire are associated (or correlated) with Ta Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Ya Electric has no effect on the direction of Hua Eng i.e., Hua Eng and Ta Ya go up and down completely randomly.

Pair Corralation between Hua Eng and Ta Ya

Assuming the 90 days trading horizon Hua Eng Wire is expected to under-perform the Ta Ya. In addition to that, Hua Eng is 1.13 times more volatile than Ta Ya Electric. It trades about -0.19 of its total potential returns per unit of risk. Ta Ya Electric is currently generating about -0.17 per unit of volatility. If you would invest  4,990  in Ta Ya Electric on September 15, 2024 and sell it today you would lose (705.00) from holding Ta Ya Electric or give up 14.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Hua Eng Wire  vs.  Ta Ya Electric

Hua Eng Wire

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hua Eng Wire 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Ta Ya Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ta Ya Electric 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Hua Eng and Ta Ya

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

The idea behind Hua Eng Wire and Ta Ya Electric 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.