Correlation Between Bich Chi and TDG Global

Can any of the company-specific risk be diversified away by investing in both Bich Chi and TDG Global 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 Bich Chi and TDG Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bich Chi Food and TDG Global Investment, you can compare the effects of market volatilities on Bich Chi and TDG Global 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 Bich Chi with a short position of TDG Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bich Chi and TDG Global.

Diversification Opportunities for Bich Chi and TDG Global

-0.65

Correlation Coefficient

Bich Chi  TDG Global

Excellent diversification

The 3 months correlation between Bich and TDG is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bich Chi Food and TDG Global Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDG Global Investment and Bich Chi 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 Bich Chi Food are associated (or correlated) with TDG Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDG Global Investment has no effect on the direction of Bich Chi i.e., Bich Chi and TDG Global go up and down completely randomly.

Pair Corralation between Bich Chi and TDG Global

Assuming the 90 days trading horizon Bich Chi Food is expected to generate 0.88 times more return on investment than TDG Global. However, Bich Chi Food is 1.13 times less risky than TDG Global. It trades about 0.06 of its potential returns per unit of risk. TDG Global Investment is currently generating about -0.03 per unit of risk. If you would invest  3,850,000  in Bich Chi Food on September 15, 2024 and sell it today you would earn a total of  200,000  from holding Bich Chi Food or generate 5.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	58.46%
Values	Daily Returns

Bich Chi Food  vs.  TDG Global Investment

Bich Chi Food

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bich Chi Food are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Bich Chi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TDG Global Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TDG Global Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bich Chi and TDG Global

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

The idea behind Bich Chi Food and TDG Global Investment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.