Correlation Between Top Union and Tung Thih

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

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

Diversification Opportunities for Top Union and Tung Thih

-0.11

Correlation Coefficient

Top Union  Tung Thih

Good diversification

The 3 months correlation between Top and Tung is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Top Union Electronics 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 Top Union 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 Top Union Electronics 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 Top Union i.e., Top Union and Tung Thih go up and down completely randomly.

Pair Corralation between Top Union and Tung Thih

Assuming the 90 days trading horizon Top Union Electronics is expected to generate 0.65 times more return on investment than Tung Thih. However, Top Union Electronics is 1.55 times less risky than Tung Thih. It trades about 0.13 of its potential returns per unit of risk. Tung Thih Electronic is currently generating about -0.14 per unit of risk. If you would invest  3,270  in Top Union Electronics on December 27, 2024 and sell it today you would earn a total of  220.00  from holding Top Union Electronics or generate 6.73% return on investment over 90 days.

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

Top Union Electronics  vs.  Tung Thih Electronic

Top Union Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Top Union Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Top Union may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tung Thih Electronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tung Thih Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Top Union and Tung Thih

The main advantage of trading using opposite Top Union and Tung Thih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Union 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 Top Union Electronics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.