Correlation Between Tong Hsing and G Shank

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

Diversification Opportunities for Tong Hsing and G Shank

-0.23

Correlation Coefficient

Tong Hsing  G Shank

Very good diversification

The 3 months correlation between Tong and 2476 is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hsing Electronic and G Shank Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Shank Enterprise 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 G Shank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Shank Enterprise has no effect on the direction of Tong Hsing i.e., Tong Hsing and G Shank go up and down completely randomly.

Pair Corralation between Tong Hsing and G Shank

Assuming the 90 days trading horizon Tong Hsing Electronic is expected to under-perform the G Shank. In addition to that, Tong Hsing is 1.16 times more volatile than G Shank Enterprise Co. It trades about -0.12 of its total potential returns per unit of risk. G Shank Enterprise Co is currently generating about 0.09 per unit of volatility. If you would invest  8,400  in G Shank Enterprise Co on December 20, 2024 and sell it today you would earn a total of  620.00  from holding G Shank Enterprise Co or generate 7.38% 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.  G Shank Enterprise Co

Tong Hsing Electronic

Risk-Adjusted Performance

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

G Shank Enterprise

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G Shank Enterprise Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, G Shank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tong Hsing and G Shank

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

The idea behind Tong Hsing Electronic and G Shank Enterprise Co 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.