Correlation Between Tong Yang and TYC Brother
Can any of the company-specific risk be diversified away by investing in both Tong Yang and TYC Brother 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 Tong Yang and TYC Brother into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tong Yang Industry and TYC Brother Industrial, you can compare the effects of market volatilities on Tong Yang and TYC Brother 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 Tong Yang with a short position of TYC Brother. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Yang and TYC Brother.
Diversification Opportunities for Tong Yang and TYC Brother
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tong and TYC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Tong Yang Industry and TYC Brother Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TYC Brother Industrial and Tong Yang 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 Tong Yang Industry are associated (or correlated) with TYC Brother. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TYC Brother Industrial has no effect on the direction of Tong Yang i.e., Tong Yang and TYC Brother go up and down completely randomly.
Pair Corralation between Tong Yang and TYC Brother
Assuming the 90 days trading horizon Tong Yang is expected to generate 4.06 times less return on investment than TYC Brother. But when comparing it to its historical volatility, Tong Yang Industry is 1.07 times less risky than TYC Brother. It trades about 0.02 of its potential returns per unit of risk. TYC Brother Industrial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,080 in TYC Brother Industrial on September 3, 2024 and sell it today you would earn a total of 1,400 from holding TYC Brother Industrial or generate 27.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tong Yang Industry vs. TYC Brother Industrial
Performance |
| Timeline |
| Tong Yang Industry |
| TYC Brother Industrial |
Tong Yang and TYC Brother Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tong Yang and TYC Brother
The main advantage of trading using opposite Tong Yang and TYC Brother positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Yang position performs unexpectedly, TYC Brother 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 TYC Brother will offset losses from the drop in TYC Brother's long position.| Tong Yang vs. Tainan Spinning Co | Tong Yang vs. Chia Her Industrial | Tong Yang vs. WiseChip Semiconductor | Tong Yang vs. Novatek Microelectronics Corp |
| TYC Brother vs. Tainan Spinning Co | TYC Brother vs. Chia Her Industrial | TYC Brother vs. WiseChip Semiconductor | TYC Brother vs. Novatek Microelectronics Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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