Correlation Between Elite Color and Tongyu Communication
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By analyzing existing cross correlation between Elite Color Environmental and Tongyu Communication, you can compare the effects of market volatilities on Elite Color and Tongyu Communication 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 Elite Color with a short position of Tongyu Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Color and Tongyu Communication.
Diversification Opportunities for Elite Color and Tongyu Communication
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elite and Tongyu is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Elite Color Environmental and Tongyu Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongyu Communication and Elite Color 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 Elite Color Environmental are associated (or correlated) with Tongyu Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongyu Communication has no effect on the direction of Elite Color i.e., Elite Color and Tongyu Communication go up and down completely randomly.
Pair Corralation between Elite Color and Tongyu Communication
Assuming the 90 days trading horizon Elite Color is expected to generate 8.56 times less return on investment than Tongyu Communication. But when comparing it to its historical volatility, Elite Color Environmental is 1.62 times less risky than Tongyu Communication. It trades about 0.01 of its potential returns per unit of risk. Tongyu Communication is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,210 in Tongyu Communication on November 7, 2024 and sell it today you would earn a total of 221.00 from holding Tongyu Communication or generate 18.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Color Environmental vs. Tongyu Communication
Performance |
| Timeline |
| Elite Color Environmental |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Tongyu Communication |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Elite Color and Tongyu Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Color and Tongyu Communication
The main advantage of trading using opposite Elite Color and Tongyu Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Color position performs unexpectedly, Tongyu Communication 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 Tongyu Communication will offset losses from the drop in Tongyu Communication's long position.The idea behind Elite Color Environmental and Tongyu Communication 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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