Correlation Between Tung Thih and Iron Force

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

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

Diversification Opportunities for Tung Thih and Iron Force

0.69

Correlation Coefficient

Tung Thih  Iron Force

Poor diversification

The 3 months correlation between Tung and Iron is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and Iron Force Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Force Industrial and Tung Thih 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 Tung Thih Electronic are associated (or correlated) with Iron Force. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Force Industrial has no effect on the direction of Tung Thih i.e., Tung Thih and Iron Force go up and down completely randomly.

Pair Corralation between Tung Thih and Iron Force

Assuming the 90 days trading horizon Tung Thih Electronic is expected to under-perform the Iron Force. In addition to that, Tung Thih is 1.16 times more volatile than Iron Force Industrial. It trades about -0.14 of its total potential returns per unit of risk. Iron Force Industrial is currently generating about -0.08 per unit of volatility. If you would invest  10,050  in Iron Force Industrial on December 27, 2024 and sell it today you would lose (540.00) from holding Iron Force Industrial or give up 5.37% of portfolio value over 90 days.

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

Tung Thih Electronic  vs.  Iron Force Industrial

Tung Thih Electronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tung Thih Electronic 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.

Iron Force Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iron Force Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Iron Force is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Tung Thih and Iron Force

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

The idea behind Tung Thih Electronic and Iron Force Industrial 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.