Correlation Between BizLink Holding and Tung Thih

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

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

Diversification Opportunities for BizLink Holding and Tung Thih

0.75

Correlation Coefficient

BizLink Holding  Tung Thih

Poor diversification

The 3 months correlation between BizLink and Tung is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BizLink Holding 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 BizLink Holding 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 BizLink Holding 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 BizLink Holding i.e., BizLink Holding and Tung Thih go up and down completely randomly.

Pair Corralation between BizLink Holding and Tung Thih

Assuming the 90 days trading horizon BizLink Holding is expected to generate 1.02 times more return on investment than Tung Thih. However, BizLink Holding is 1.02 times more volatile than Tung Thih Electronic. It trades about 0.27 of its potential returns per unit of risk. Tung Thih Electronic is currently generating about 0.1 per unit of risk. If you would invest  41,300  in BizLink Holding on September 14, 2024 and sell it today you would earn a total of  28,300  from holding BizLink Holding or generate 68.52% return on investment over 90 days.

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

BizLink Holding  vs.  Tung Thih Electronic

BizLink Holding

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BizLink Holding are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, BizLink Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Tung Thih Electronic

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tung Thih Electronic are ranked lower than 7 (%) 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.

Pair Trading with BizLink Holding and Tung Thih

The main advantage of trading using opposite BizLink Holding and Tung Thih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BizLink Holding 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 BizLink Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.