Correlation Between Kenda Rubber and Tung Thih

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

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

Diversification Opportunities for Kenda Rubber and Tung Thih

0.37

Correlation Coefficient

Kenda Rubber  Tung Thih

Weak diversification

The 3 months correlation between Kenda and Tung is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kenda Rubber Industrial and Tung Thih Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Thih Electronic and Kenda 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 Kenda Rubber Industrial are associated (or correlated) with Tung Thih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Thih Electronic has no effect on the direction of Kenda Rubber i.e., Kenda Rubber and Tung Thih go up and down completely randomly.

Pair Corralation between Kenda Rubber and Tung Thih

Assuming the 90 days trading horizon Kenda Rubber Industrial is expected to generate 0.66 times more return on investment than Tung Thih. However, Kenda Rubber Industrial is 1.51 times less risky than Tung Thih. It trades about -0.02 of its potential returns per unit of risk. Tung Thih Electronic is currently generating about -0.22 per unit of risk. If you would invest  2,640  in Kenda Rubber Industrial on October 20, 2024 and sell it today you would lose (15.00) from holding Kenda Rubber Industrial or give up 0.57% of portfolio value over 90 days.

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

Kenda Rubber Industrial  vs.  Tung Thih Electronic

Kenda Rubber Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenda Rubber Industrial 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 Thih Electronic

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Kenda Rubber and Tung Thih

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

The idea behind Kenda Rubber Industrial and Tung Thih Electronic 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.