Correlation Between Tsann Kuen and Bon Fame

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

By analyzing existing cross correlation between Tsann Kuen Enterprise and Bon Fame Co, you can compare the effects of market volatilities on Tsann Kuen and Bon Fame 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 Tsann Kuen with a short position of Bon Fame. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsann Kuen and Bon Fame.

Diversification Opportunities for Tsann Kuen and Bon Fame

-0.54

Correlation Coefficient

Tsann Kuen  Bon Fame

Excellent diversification

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

Pair Corralation between Tsann Kuen and Bon Fame

Assuming the 90 days trading horizon Tsann Kuen Enterprise is expected to under-perform the Bon Fame. But the stock apears to be less risky and, when comparing its historical volatility, Tsann Kuen Enterprise is 2.56 times less risky than Bon Fame. The stock trades about -0.06 of its potential returns per unit of risk. The Bon Fame Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,770  in Bon Fame Co on February 6, 2024 and sell it today you would earn a total of  1,190  from holding Bon Fame Co or generate 13.57% return on investment over 90 days.

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

Tsann Kuen Enterprise  vs.  Bon Fame Co

Tsann Kuen Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bon Fame

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bon Fame Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bon Fame showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tsann Kuen and Bon Fame

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

The idea behind Tsann Kuen Enterprise and Bon Fame Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.