Correlation Between TBI Motion and Hiwin Technologies

Can any of the company-specific risk be diversified away by investing in both TBI Motion and Hiwin Technologies 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 TBI Motion and Hiwin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TBI Motion Technology and Hiwin Technologies Corp, you can compare the effects of market volatilities on TBI Motion and Hiwin Technologies 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 TBI Motion with a short position of Hiwin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBI Motion and Hiwin Technologies.

Diversification Opportunities for TBI Motion and Hiwin Technologies

0.84

Correlation Coefficient

TBI Motion  Hiwin Technologies

Very poor diversification

The 3 months correlation between TBI and Hiwin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TBI Motion Technology and Hiwin Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Technologies Corp and TBI Motion 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 TBI Motion Technology are associated (or correlated) with Hiwin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Technologies Corp has no effect on the direction of TBI Motion i.e., TBI Motion and Hiwin Technologies go up and down completely randomly.

Pair Corralation between TBI Motion and Hiwin Technologies

Assuming the 90 days trading horizon TBI Motion Technology is expected to generate 1.16 times more return on investment than Hiwin Technologies. However, TBI Motion is 1.16 times more volatile than Hiwin Technologies Corp. It trades about 0.04 of its potential returns per unit of risk. Hiwin Technologies Corp is currently generating about 0.03 per unit of risk. If you would invest  3,917  in TBI Motion Technology on December 5, 2024 and sell it today you would earn a total of  1,633  from holding TBI Motion Technology or generate 41.69% return on investment over 90 days.

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

TBI Motion Technology  vs.  Hiwin Technologies Corp

TBI Motion Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TBI Motion Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TBI Motion showed solid returns over the last few months and may actually be approaching a breakup point.

Hiwin Technologies Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Technologies Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TBI Motion and Hiwin Technologies

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

The idea behind TBI Motion Technology and Hiwin Technologies Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.