Correlation Between Te Chang and United Radiant

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Can any of the company-specific risk be diversified away by investing in both Te Chang and United Radiant 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 United Radiant 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 United Radiant Technology, you can compare the effects of market volatilities on Te Chang and United Radiant 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 United Radiant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Te Chang and United Radiant.

Diversification Opportunities for Te Chang and United Radiant

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between 5511 and United is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Te Chang Construction and United Radiant Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Radiant Technology 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 United Radiant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Radiant Technology has no effect on the direction of Te Chang i.e., Te Chang and United Radiant go up and down completely randomly.

Pair Corralation between Te Chang and United Radiant

Assuming the 90 days trading horizon Te Chang is expected to generate 46.02 times less return on investment than United Radiant. But when comparing it to its historical volatility, Te Chang Construction is 1.76 times less risky than United Radiant. It trades about 0.0 of its potential returns per unit of risk. United Radiant Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,075  in United Radiant Technology on December 23, 2024 and sell it today you would earn a total of  230.00  from holding United Radiant Technology or generate 11.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Te Chang Construction  vs.  United Radiant Technology

 Performance 
       Timeline  
Te Chang Construction 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
United Radiant Technology 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in United Radiant Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, United Radiant may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Te Chang and United Radiant Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Te Chang and United Radiant

The main advantage of trading using opposite Te Chang and United Radiant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Te Chang position performs unexpectedly, United Radiant 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 United Radiant will offset losses from the drop in United Radiant's long position.
The idea behind Te Chang Construction and United Radiant Technology 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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