Correlation Between Gordon Auto and Tong Yang
Can any of the company-specific risk be diversified away by investing in both Gordon Auto 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 Gordon Auto and Tong Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gordon Auto Body and Tong Yang Industry, you can compare the effects of market volatilities on Gordon Auto 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 Gordon Auto with a short position of Tong Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gordon Auto and Tong Yang.
Diversification Opportunities for Gordon Auto and Tong Yang
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gordon and Tong is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gordon Auto Body 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 Gordon Auto 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 Gordon Auto Body 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 Gordon Auto i.e., Gordon Auto and Tong Yang go up and down completely randomly.
Pair Corralation between Gordon Auto and Tong Yang
Assuming the 90 days trading horizon Gordon Auto Body is expected to generate 1.49 times more return on investment than Tong Yang. However, Gordon Auto is 1.49 times more volatile than Tong Yang Industry. It trades about -0.05 of its potential returns per unit of risk. Tong Yang Industry is currently generating about -0.13 per unit of risk. 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 |
Gordon Auto Body vs. Tong Yang Industry
Performance |
| Timeline |
| Gordon Auto Body |
| Tong Yang Industry |
Gordon Auto and Tong Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gordon Auto and Tong Yang
The main advantage of trading using opposite Gordon Auto and Tong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gordon Auto 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.| Gordon Auto vs. Tong Yang Industry | Gordon Auto vs. Ta Yih Industrial | Gordon Auto vs. Basso Industry Corp | Gordon Auto vs. China Motor Corp |
| Tong Yang vs. Ta Yih Industrial | Tong Yang vs. Basso Industry Corp | Tong Yang vs. China Motor Corp | Tong Yang vs. Gordon Auto Body |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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