Correlation Between Tung Thih and Eurocharm Holdings

Can any of the company-specific risk be diversified away by investing in both Tung Thih and Eurocharm Holdings 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 Eurocharm Holdings 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 Eurocharm Holdings Co, you can compare the effects of market volatilities on Tung Thih and Eurocharm Holdings 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 Eurocharm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Thih and Eurocharm Holdings.

Diversification Opportunities for Tung Thih and Eurocharm Holdings

-0.42

Correlation Coefficient

Tung Thih  Eurocharm Holdings

Very good diversification

The 3 months correlation between Tung and Eurocharm is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and Eurocharm Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurocharm Holdings 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 Eurocharm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurocharm Holdings has no effect on the direction of Tung Thih i.e., Tung Thih and Eurocharm Holdings go up and down completely randomly.

Pair Corralation between Tung Thih and Eurocharm Holdings

Assuming the 90 days trading horizon Tung Thih Electronic is expected to generate 1.33 times more return on investment than Eurocharm Holdings. However, Tung Thih is 1.33 times more volatile than Eurocharm Holdings Co. It trades about 0.08 of its potential returns per unit of risk. Eurocharm Holdings Co is currently generating about 0.02 per unit of risk. If you would invest  8,360  in Tung Thih Electronic on September 15, 2024 and sell it today you would earn a total of  1,270  from holding Tung Thih Electronic or generate 15.19% return on investment over 90 days.

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

Tung Thih Electronic  vs.  Eurocharm Holdings Co

Tung Thih Electronic

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tung Thih Electronic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tung Thih showed solid returns over the last few months and may actually be approaching a breakup point.

Eurocharm Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eurocharm Holdings Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Eurocharm Holdings 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 Tung Thih and Eurocharm Holdings

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

The idea behind Tung Thih Electronic and Eurocharm Holdings Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.