Correlation Between Tong Hsing and Chinese Maritime

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

Diversification Opportunities for Tong Hsing and Chinese Maritime

-0.23
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Tong Hsing and Chinese Maritime

Assuming the 90 days trading horizon Tong Hsing Electronic is expected to under-perform the Chinese Maritime. In addition to that, Tong Hsing is 1.83 times more volatile than Chinese Maritime Transport. It trades about -0.2 of its total potential returns per unit of risk. Chinese Maritime Transport is currently generating about -0.07 per unit of volatility. If you would invest  4,030  in Chinese Maritime Transport on October 25, 2024 and sell it today you would lose (70.00) from holding Chinese Maritime Transport or give up 1.74% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tong Hsing Electronic  vs.  Chinese Maritime Transport

 Performance 
       Timeline  
Tong Hsing Electronic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Chinese Maritime Tra 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Chinese Maritime Transport 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.

Tong Hsing and Chinese Maritime Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tong Hsing and Chinese Maritime

The main advantage of trading using opposite Tong Hsing and Chinese Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Hsing position performs unexpectedly, Chinese Maritime 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 Chinese Maritime will offset losses from the drop in Chinese Maritime's long position.
The idea behind Tong Hsing Electronic and Chinese Maritime Transport 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.
Check out your portfolio center.
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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