Correlation Between Samart Public and Tong Hua

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

By analyzing existing cross correlation between Samart Public and Tong Hua Holding, you can compare the effects of market volatilities on Samart Public and Tong Hua 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 Samart Public with a short position of Tong Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samart Public and Tong Hua.

Diversification Opportunities for Samart Public and Tong Hua

0.79

Correlation Coefficient

Samart Public  Tong Hua

Poor diversification

The 3 months correlation between Samart and Tong is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Samart Public and Tong Hua Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hua Holding and Samart Public 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 Samart Public are associated (or correlated) with Tong Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hua Holding has no effect on the direction of Samart Public i.e., Samart Public and Tong Hua go up and down completely randomly.

Pair Corralation between Samart Public and Tong Hua

Assuming the 90 days trading horizon Samart Public is expected to under-perform the Tong Hua. But the stock apears to be less risky and, when comparing its historical volatility, Samart Public is 1.15 times less risky than Tong Hua. The stock trades about -0.06 of its potential returns per unit of risk. The Tong Hua Holding is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Tong Hua Holding on April 24, 2025 and sell it today you would lose (3.00) from holding Tong Hua Holding or give up 4.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Samart Public  vs.  Tong Hua Holding

Samart Public

Risk-Adjusted Performance

Very Weak

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

Tong Hua Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tong Hua Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Tong Hua is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Samart Public and Tong Hua

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

The idea behind Samart Public and Tong Hua Holding 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.