Correlation Between Tung Thih and Max Zipper

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

Diversification Opportunities for Tung Thih and Max Zipper

0.04

Correlation Coefficient

Tung Thih  Max Zipper

Significant diversification

The 3 months correlation between Tung and Max is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and Max Zipper Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Zipper 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 Max Zipper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Zipper has no effect on the direction of Tung Thih i.e., Tung Thih and Max Zipper go up and down completely randomly.

Pair Corralation between Tung Thih and Max Zipper

Assuming the 90 days trading horizon Tung Thih Electronic is expected to generate 18.89 times more return on investment than Max Zipper. However, Tung Thih is 18.89 times more volatile than Max Zipper Co. It trades about 0.06 of its potential returns per unit of risk. Max Zipper Co is currently generating about 0.07 per unit of risk. If you would invest  11,959  in Tung Thih Electronic on October 4, 2024 and sell it today you would lose (3,089) from holding Tung Thih Electronic or give up 25.83% of portfolio value over 90 days.

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

Tung Thih Electronic  vs.  Max Zipper Co

Tung Thih Electronic

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tung Thih Electronic are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tung Thih may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Max Zipper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Max Zipper Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Max Zipper may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tung Thih and Max Zipper

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

The idea behind Tung Thih Electronic and Max Zipper 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.