Correlation Between Yeong Guan and ThinTech Materials
Can any of the company-specific risk be diversified away by investing in both Yeong Guan and ThinTech Materials 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 Yeong Guan and ThinTech Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yeong Guan Energy and ThinTech Materials Technology, you can compare the effects of market volatilities on Yeong Guan and ThinTech Materials 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 Yeong Guan with a short position of ThinTech Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yeong Guan and ThinTech Materials.
Diversification Opportunities for Yeong Guan and ThinTech Materials
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yeong and ThinTech is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Yeong Guan Energy and ThinTech Materials Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ThinTech Materials and Yeong Guan 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 Yeong Guan Energy are associated (or correlated) with ThinTech Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ThinTech Materials has no effect on the direction of Yeong Guan i.e., Yeong Guan and ThinTech Materials go up and down completely randomly.
Pair Corralation between Yeong Guan and ThinTech Materials
Assuming the 90 days trading horizon Yeong Guan Energy is expected to generate 0.62 times more return on investment than ThinTech Materials. However, Yeong Guan Energy is 1.61 times less risky than ThinTech Materials. It trades about 0.02 of its potential returns per unit of risk. ThinTech Materials Technology is currently generating about -0.27 per unit of risk. If you would invest 3,655 in Yeong Guan Energy on October 25, 2024 and sell it today you would earn a total of 15.00 from holding Yeong Guan Energy or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yeong Guan Energy vs. ThinTech Materials Technology
Performance |
| Timeline |
| Yeong Guan Energy |
| ThinTech Materials |
Yeong Guan and ThinTech Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yeong Guan and ThinTech Materials
The main advantage of trading using opposite Yeong Guan and ThinTech Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yeong Guan position performs unexpectedly, ThinTech Materials 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 ThinTech Materials will offset losses from the drop in ThinTech Materials' long position.| Yeong Guan vs. TECO Electric Machinery | Yeong Guan vs. Swancor Holding Co | Yeong Guan vs. Airtac International Group | Yeong Guan vs. Grape King Bio |
| ThinTech Materials vs. Jetwell Computer Co | ThinTech Materials vs. U Media Communications | ThinTech Materials vs. Iron Force Industrial | ThinTech Materials vs. Elitegroup Computer Systems |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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