Correlation Between Tong Hsing and CSBC Corp

Can any of the company-specific risk be diversified away by investing in both Tong Hsing and CSBC Corp 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 CSBC Corp 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 CSBC Corp Taiwan, you can compare the effects of market volatilities on Tong Hsing and CSBC Corp 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 CSBC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Hsing and CSBC Corp.

Diversification Opportunities for Tong Hsing and CSBC Corp

-0.16

Correlation Coefficient

Tong Hsing  CSBC Corp

Good diversification

The 3 months correlation between Tong and CSBC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hsing Electronic and CSBC Corp Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSBC Corp Taiwan 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 CSBC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSBC Corp Taiwan has no effect on the direction of Tong Hsing i.e., Tong Hsing and CSBC Corp go up and down completely randomly.

Pair Corralation between Tong Hsing and CSBC Corp

Assuming the 90 days trading horizon Tong Hsing Electronic is expected to under-perform the CSBC Corp. In addition to that, Tong Hsing is 1.31 times more volatile than CSBC Corp Taiwan. It trades about -0.03 of its total potential returns per unit of risk. CSBC Corp Taiwan is currently generating about -0.02 per unit of volatility. If you would invest  1,870  in CSBC Corp Taiwan on October 11, 2024 and sell it today you would lose (350.00) from holding CSBC Corp Taiwan or give up 18.72% of portfolio value over 90 days.

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

Tong Hsing Electronic  vs.  CSBC Corp Taiwan

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 fairly stable basic indicators, Tong Hsing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CSBC Corp Taiwan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSBC Corp Taiwan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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 CSBC Corp

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

The idea behind Tong Hsing Electronic and CSBC Corp Taiwan 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 Transaction History module to view history of all your transactions and understand their impact on performance.