Correlation Between I Jang and Tang Eng

Can any of the company-specific risk be diversified away by investing in both I Jang and Tang Eng 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 I Jang and Tang Eng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between I Jang Industrial and Tang Eng Iron, you can compare the effects of market volatilities on I Jang and Tang Eng 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 I Jang with a short position of Tang Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Jang and Tang Eng.

Diversification Opportunities for I Jang and Tang Eng

-0.21

Correlation Coefficient

I Jang  Tang Eng

Very good diversification

The 3 months correlation between 8342 and Tang is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding I Jang Industrial and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron and I Jang 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 I Jang Industrial are associated (or correlated) with Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of I Jang i.e., I Jang and Tang Eng go up and down completely randomly.

Pair Corralation between I Jang and Tang Eng

Assuming the 90 days trading horizon I Jang Industrial is expected to generate 0.87 times more return on investment than Tang Eng. However, I Jang Industrial is 1.15 times less risky than Tang Eng. It trades about 0.0 of its potential returns per unit of risk. Tang Eng Iron is currently generating about -0.28 per unit of risk. If you would invest  8,960  in I Jang Industrial on October 8, 2024 and sell it today you would lose (10.00) from holding I Jang Industrial or give up 0.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

I Jang Industrial  vs.  Tang Eng Iron

I Jang Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I Jang Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, I Jang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tang Eng Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tang Eng Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tang Eng 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 I Jang and Tang Eng

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

The idea behind I Jang Industrial and Tang Eng Iron 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..