Correlation Between Te Chang and Kura Sushi

Can any of the company-specific risk be diversified away by investing in both Te Chang and Kura Sushi 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 Te Chang and Kura Sushi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Te Chang Construction and Kura Sushi Asia, you can compare the effects of market volatilities on Te Chang and Kura Sushi 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 Te Chang with a short position of Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Te Chang and Kura Sushi.

Diversification Opportunities for Te Chang and Kura Sushi

0.56

Correlation Coefficient

Te Chang  Kura Sushi

Very weak diversification

The 3 months correlation between 5511 and Kura is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Te Chang Construction and Kura Sushi Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi Asia and Te Chang 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 Te Chang Construction are associated (or correlated) with Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi Asia has no effect on the direction of Te Chang i.e., Te Chang and Kura Sushi go up and down completely randomly.

Pair Corralation between Te Chang and Kura Sushi

Assuming the 90 days trading horizon Te Chang Construction is expected to generate 1.22 times more return on investment than Kura Sushi. However, Te Chang is 1.22 times more volatile than Kura Sushi Asia. It trades about -0.03 of its potential returns per unit of risk. Kura Sushi Asia is currently generating about -0.09 per unit of risk. If you would invest  6,240  in Te Chang Construction on December 29, 2024 and sell it today you would lose (130.00) from holding Te Chang Construction or give up 2.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Te Chang Construction  vs.  Kura Sushi Asia

Te Chang Construction

Risk-Adjusted Performance

Very Weak

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

Kura Sushi Asia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kura Sushi Asia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kura Sushi 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 Te Chang and Kura Sushi

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

The idea behind Te Chang Construction and Kura Sushi Asia 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.