Correlation Between SANOK RUBBER and TOREX SEMICONDUCTOR

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

By analyzing existing cross correlation between SANOK RUBBER ZY and TOREX SEMICONDUCTOR LTD, you can compare the effects of market volatilities on SANOK RUBBER and TOREX SEMICONDUCTOR 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 SANOK RUBBER with a short position of TOREX SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANOK RUBBER and TOREX SEMICONDUCTOR.

Diversification Opportunities for SANOK RUBBER and TOREX SEMICONDUCTOR

0.67

Correlation Coefficient

SANOK RUBBER  TOREX SEMICONDUCTOR

Poor diversification

The 3 months correlation between SANOK and TOREX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SANOK RUBBER ZY and TOREX SEMICONDUCTOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOREX SEMICONDUCTOR LTD and SANOK RUBBER 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 SANOK RUBBER ZY are associated (or correlated) with TOREX SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOREX SEMICONDUCTOR LTD has no effect on the direction of SANOK RUBBER i.e., SANOK RUBBER and TOREX SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between SANOK RUBBER and TOREX SEMICONDUCTOR

Assuming the 90 days horizon SANOK RUBBER ZY is expected to generate 0.84 times more return on investment than TOREX SEMICONDUCTOR. However, SANOK RUBBER ZY is 1.19 times less risky than TOREX SEMICONDUCTOR. It trades about 0.12 of its potential returns per unit of risk. TOREX SEMICONDUCTOR LTD is currently generating about 0.09 per unit of risk. If you would invest  455.00  in SANOK RUBBER ZY on December 20, 2024 and sell it today you would earn a total of  72.00  from holding SANOK RUBBER ZY or generate 15.82% return on investment over 90 days.

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

SANOK RUBBER ZY  vs.  TOREX SEMICONDUCTOR LTD

SANOK RUBBER ZY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SANOK RUBBER ZY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SANOK RUBBER reported solid returns over the last few months and may actually be approaching a breakup point.

TOREX SEMICONDUCTOR LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TOREX SEMICONDUCTOR LTD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TOREX SEMICONDUCTOR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SANOK RUBBER and TOREX SEMICONDUCTOR

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

The idea behind SANOK RUBBER ZY and TOREX SEMICONDUCTOR LTD 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.