Correlation Between Tong Hsing and Anderson Industrial

Can any of the company-specific risk be diversified away by investing in both Tong Hsing and Anderson Industrial 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 Tong Hsing and Anderson Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tong Hsing Electronic and Anderson Industrial Corp, you can compare the effects of market volatilities on Tong Hsing and Anderson Industrial 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 Tong Hsing with a short position of Anderson Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Hsing and Anderson Industrial.

Diversification Opportunities for Tong Hsing and Anderson Industrial

-0.15

Correlation Coefficient

Tong Hsing  Anderson Industrial

Good diversification

The 3 months correlation between Tong and Anderson is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hsing Electronic and Anderson Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anderson Industrial Corp and Tong Hsing 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 Tong Hsing Electronic are associated (or correlated) with Anderson Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anderson Industrial Corp has no effect on the direction of Tong Hsing i.e., Tong Hsing and Anderson Industrial go up and down completely randomly.

Pair Corralation between Tong Hsing and Anderson Industrial

Assuming the 90 days trading horizon Tong Hsing Electronic is expected to under-perform the Anderson Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Tong Hsing Electronic is 1.48 times less risky than Anderson Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The Anderson Industrial Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,270  in Anderson Industrial Corp on October 25, 2024 and sell it today you would earn a total of  100.00  from holding Anderson Industrial Corp or generate 7.87% return on investment over 90 days.

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

Tong Hsing Electronic  vs.  Anderson Industrial Corp

Tong Hsing Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tong Hsing 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.

Anderson Industrial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anderson Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Tong Hsing and Anderson Industrial

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

The idea behind Tong Hsing Electronic and Anderson Industrial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.