Correlation Between Information Technology and Tong Tai
Can any of the company-specific risk be diversified away by investing in both Information Technology and Tong Tai 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 Information Technology and Tong Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Technology Total and Tong Tai Machine Tool, you can compare the effects of market volatilities on Information Technology and Tong Tai 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 Information Technology with a short position of Tong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Technology and Tong Tai.
Diversification Opportunities for Information Technology and Tong Tai
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Information and Tong is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Information Technology Total and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine and Information Technology 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 Information Technology Total are associated (or correlated) with Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of Information Technology i.e., Information Technology and Tong Tai go up and down completely randomly.
Pair Corralation between Information Technology and Tong Tai
Assuming the 90 days trading horizon Information Technology Total is expected to generate 0.71 times more return on investment than Tong Tai. However, Information Technology Total is 1.4 times less risky than Tong Tai. It trades about 0.08 of its potential returns per unit of risk. Tong Tai Machine Tool is currently generating about -0.1 per unit of risk. If you would invest 4,280 in Information Technology Total on September 15, 2024 and sell it today you would earn a total of 405.00 from holding Information Technology Total or generate 9.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Information Technology Total vs. Tong Tai Machine Tool
Performance |
Timeline |
Information Technology |
Tong Tai Machine |
Information Technology and Tong Tai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Information Technology and Tong Tai
The main advantage of trading using opposite Information Technology and Tong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Technology position performs unexpectedly, Tong Tai 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 Tong Tai will offset losses from the drop in Tong Tai's long position.Information Technology vs. Wistron Information Technology | Information Technology vs. Syscom Computer Engineering | Information Technology vs. Tatung System Technologies |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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