Correlation Between Tong Hsing and Audix Corp

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

Diversification Opportunities for Tong Hsing and Audix Corp

0.36

Correlation Coefficient

Tong Hsing  Audix Corp

Weak diversification

The 3 months correlation between Tong and Audix is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hsing Electronic and Audix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audix 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 Audix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audix Corp has no effect on the direction of Tong Hsing i.e., Tong Hsing and Audix Corp go up and down completely randomly.

Pair Corralation between Tong Hsing and Audix Corp

Assuming the 90 days trading horizon Tong Hsing Electronic is expected to under-perform the Audix Corp. In addition to that, Tong Hsing is 4.51 times more volatile than Audix Corp. It trades about -0.06 of its total potential returns per unit of risk. Audix Corp is currently generating about -0.21 per unit of volatility. If you would invest  7,090  in Audix Corp on October 26, 2024 and sell it today you would lose (390.00) from holding Audix Corp or give up 5.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tong Hsing Electronic  vs.  Audix 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.

Audix Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Audix Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Audix Corp 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 Tong Hsing and Audix Corp

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

The idea behind Tong Hsing Electronic and Audix 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.