Correlation Between Telecoms Informatics and Tin Nghia

Can any of the company-specific risk be diversified away by investing in both Telecoms Informatics and Tin Nghia 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 Telecoms Informatics and Tin Nghia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Telecoms Informatics JSC and Tin Nghia Industrial, you can compare the effects of market volatilities on Telecoms Informatics and Tin Nghia 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 Telecoms Informatics with a short position of Tin Nghia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecoms Informatics and Tin Nghia.

Diversification Opportunities for Telecoms Informatics and Tin Nghia

-0.54

Correlation Coefficient

Telecoms Informatics  Tin Nghia

Excellent diversification

The 3 months correlation between Telecoms and Tin is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Telecoms Informatics JSC and Tin Nghia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tin Nghia Industrial and Telecoms Informatics 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 Telecoms Informatics JSC are associated (or correlated) with Tin Nghia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tin Nghia Industrial has no effect on the direction of Telecoms Informatics i.e., Telecoms Informatics and Tin Nghia go up and down completely randomly.

Pair Corralation between Telecoms Informatics and Tin Nghia

Assuming the 90 days trading horizon Telecoms Informatics JSC is expected to generate 1.71 times more return on investment than Tin Nghia. However, Telecoms Informatics is 1.71 times more volatile than Tin Nghia Industrial. It trades about 0.06 of its potential returns per unit of risk. Tin Nghia Industrial is currently generating about -0.01 per unit of risk. If you would invest  1,205,000  in Telecoms Informatics JSC on September 14, 2024 and sell it today you would earn a total of  80,000  from holding Telecoms Informatics JSC or generate 6.64% return on investment over 90 days.

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

Telecoms Informatics JSC  vs.  Tin Nghia Industrial

Telecoms Informatics JSC

Risk-Adjusted Performance

4 of 100

Insignificant

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

Tin Nghia Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tin Nghia Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tin Nghia is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Telecoms Informatics and Tin Nghia

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

The idea behind Telecoms Informatics JSC and Tin Nghia Industrial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.