Correlation Between Tong Hsing and Sinbon Electronics

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

Diversification Opportunities for Tong Hsing and Sinbon Electronics

-0.31

Correlation Coefficient

Tong Hsing  Sinbon Electronics

Very good diversification

The 3 months correlation between Tong and Sinbon is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tong Hsing Electronic and Sinbon Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinbon Electronics 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 Sinbon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinbon Electronics has no effect on the direction of Tong Hsing i.e., Tong Hsing and Sinbon Electronics go up and down completely randomly.

Pair Corralation between Tong Hsing and Sinbon Electronics

Assuming the 90 days trading horizon Tong Hsing Electronic is expected to under-perform the Sinbon Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Tong Hsing Electronic is 1.26 times less risky than Sinbon Electronics. The stock trades about -0.14 of its potential returns per unit of risk. The Sinbon Electronics Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  26,000  in Sinbon Electronics Co on December 22, 2024 and sell it today you would earn a total of  2,350  from holding Sinbon Electronics Co or generate 9.04% 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.  Sinbon Electronics 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.

Sinbon Electronics

Risk-Adjusted Performance

Modest

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

Pair Trading with Tong Hsing and Sinbon Electronics

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

The idea behind Tong Hsing Electronic and Sinbon Electronics 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.