Correlation Between Thachang Green and Quality Construction

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

By analyzing existing cross correlation between Thachang Green Energy and Quality Construction Products, you can compare the effects of market volatilities on Thachang Green and Quality Construction 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 Thachang Green with a short position of Quality Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thachang Green and Quality Construction.

Diversification Opportunities for Thachang Green and Quality Construction

0.81

Correlation Coefficient

Thachang Green  Quality Construction

Very poor diversification

The 3 months correlation between Thachang and Quality is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Thachang Green Energy and Quality Construction Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Construction and Thachang Green 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 Thachang Green Energy are associated (or correlated) with Quality Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Construction has no effect on the direction of Thachang Green i.e., Thachang Green and Quality Construction go up and down completely randomly.

Pair Corralation between Thachang Green and Quality Construction

Assuming the 90 days trading horizon Thachang Green Energy is expected to under-perform the Quality Construction. But the stock apears to be less risky and, when comparing its historical volatility, Thachang Green Energy is 1.03 times less risky than Quality Construction. The stock trades about -0.34 of its potential returns per unit of risk. The Quality Construction Products is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  1,020  in Quality Construction Products on September 4, 2024 and sell it today you would lose (75.00) from holding Quality Construction Products or give up 7.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Thachang Green Energy  vs.  Quality Construction Products

Thachang Green Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thachang Green Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Quality Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quality Construction Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Thachang Green and Quality Construction

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

The idea behind Thachang Green Energy and Quality Construction Products 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.