Correlation Between Nasdaq and Tung Ho

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

By analyzing existing cross correlation between Nasdaq Inc and Tung Ho Textile, you can compare the effects of market volatilities on Nasdaq and Tung Ho 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 Nasdaq with a short position of Tung Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Tung Ho.

Diversification Opportunities for Nasdaq and Tung Ho

0.51

Correlation Coefficient

Nasdaq  Tung Ho

Very weak diversification

The 3 months correlation between Nasdaq and Tung is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Tung Ho Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Ho Textile and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Tung Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Ho Textile has no effect on the direction of Nasdaq i.e., Nasdaq and Tung Ho go up and down completely randomly.

Pair Corralation between Nasdaq and Tung Ho

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.89 times more return on investment than Tung Ho. However, Nasdaq Inc is 1.12 times less risky than Tung Ho. It trades about -0.03 of its potential returns per unit of risk. Tung Ho Textile is currently generating about -0.14 per unit of risk. If you would invest  7,768  in Nasdaq Inc on December 22, 2024 and sell it today you would lose (213.00) from holding Nasdaq Inc or give up 2.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.44%
Values	Daily Returns

Nasdaq Inc  vs.  Tung Ho Textile

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Tung Ho Textile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tung Ho Textile 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.

Pair Trading with Nasdaq and Tung Ho

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

The idea behind Nasdaq Inc and Tung Ho Textile 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.