Correlation Between Great Wall and Tong Yang
Can any of the company-specific risk be diversified away by investing in both Great Wall and Tong Yang 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 Great Wall and Tong Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Tong Yang Industry, you can compare the effects of market volatilities on Great Wall and Tong Yang 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 Great Wall with a short position of Tong Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Tong Yang.
Diversification Opportunities for Great Wall and Tong Yang
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Great and Tong is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Tong Yang Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Yang Industry and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Tong Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Yang Industry has no effect on the direction of Great Wall i.e., Great Wall and Tong Yang go up and down completely randomly.
Pair Corralation between Great Wall and Tong Yang
Assuming the 90 days trading horizon Great Wall is expected to generate 4.02 times less return on investment than Tong Yang. But when comparing it to its historical volatility, Great Wall Enterprise is 2.01 times less risky than Tong Yang. It trades about 0.05 of its potential returns per unit of risk. Tong Yang Industry is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 9,050 in Tong Yang Industry on January 14, 2025 and sell it today you would earn a total of 3,500 from holding Tong Yang Industry or generate 38.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Tong Yang Industry
Performance |
| Timeline |
| Great Wall Enterprise |
| Tong Yang Industry |
Great Wall and Tong Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Tong Yang
The main advantage of trading using opposite Great Wall and Tong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Tong Yang 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 Yang will offset losses from the drop in Tong Yang's long position.| Great Wall vs. Charoen Pokphand Enterprise | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Lien Hwa Industrial | Great Wall vs. Standard Foods Corp |
| Tong Yang vs. TYC Brother Industrial | Tong Yang vs. Hota Industrial Mfg | Tong Yang vs. Yulon Motor Co | Tong Yang vs. Far Eastern New |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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