Correlation Between Tong Yang and Gordon Auto
Can any of the company-specific risk be diversified away by investing in both Tong Yang and Gordon Auto 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 Gordon Auto 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 Gordon Auto Body, you can compare the effects of market volatilities on Tong Yang and Gordon Auto 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 Gordon Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Yang and Gordon Auto.
Diversification Opportunities for Tong Yang and Gordon Auto
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tong and Gordon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tong Yang Industry and Gordon Auto Body in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gordon Auto Body 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 Gordon Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gordon Auto Body has no effect on the direction of Tong Yang i.e., Tong Yang and Gordon Auto go up and down completely randomly.
Pair Corralation between Tong Yang and Gordon Auto
Assuming the 90 days trading horizon Tong Yang Industry is expected to under-perform the Gordon Auto. But the stock apears to be less risky and, when comparing its historical volatility, Tong Yang Industry is 1.49 times less risky than Gordon Auto. The stock trades about -0.13 of its potential returns per unit of risk. The Gordon Auto Body is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 3,870 in Gordon Auto Body on October 25, 2024 and sell it today you would lose (145.00) from holding Gordon Auto Body or give up 3.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tong Yang Industry vs. Gordon Auto Body
Performance |
Timeline |
Tong Yang Industry |
Gordon Auto Body |
Tong Yang and Gordon Auto Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tong Yang and Gordon Auto
The main advantage of trading using opposite Tong Yang and Gordon Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Yang position performs unexpectedly, Gordon Auto 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 Gordon Auto will offset losses from the drop in Gordon Auto's long position.Tong Yang vs. Ta Yih Industrial | Tong Yang vs. Basso Industry Corp | Tong Yang vs. China Motor Corp | Tong Yang vs. Gordon Auto Body |
Gordon Auto vs. Tong Yang Industry | Gordon Auto vs. Ta Yih Industrial | Gordon Auto vs. Basso Industry Corp | Gordon Auto vs. China Motor 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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