Correlation Between Elite Material and Ton Yi
Can any of the company-specific risk be diversified away by investing in both Elite Material and Ton Yi 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 Elite Material and Ton Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Material Co and Ton Yi Industrial, you can compare the effects of market volatilities on Elite Material and Ton Yi 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 Elite Material with a short position of Ton Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Material and Ton Yi.
Diversification Opportunities for Elite Material and Ton Yi
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elite and Ton is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Elite Material Co and Ton Yi Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ton Yi Industrial and Elite Material 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 Elite Material Co are associated (or correlated) with Ton Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ton Yi Industrial has no effect on the direction of Elite Material i.e., Elite Material and Ton Yi go up and down completely randomly.
Pair Corralation between Elite Material and Ton Yi
Assuming the 90 days trading horizon Elite Material Co is expected to generate 1.17 times more return on investment than Ton Yi. However, Elite Material is 1.17 times more volatile than Ton Yi Industrial. It trades about 0.25 of its potential returns per unit of risk. Ton Yi Industrial is currently generating about -0.13 per unit of risk. If you would invest 42,000 in Elite Material Co on August 30, 2024 and sell it today you would earn a total of 4,750 from holding Elite Material Co or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Material Co vs. Ton Yi Industrial
Performance |
| Timeline |
| Elite Material |
| Ton Yi Industrial |
Elite Material and Ton Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Material and Ton Yi
The main advantage of trading using opposite Elite Material and Ton Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Material position performs unexpectedly, Ton Yi 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 Ton Yi will offset losses from the drop in Ton Yi's long position.The idea behind Elite Material Co and Ton Yi Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ton Yi vs. Far Eastern Department | Ton Yi vs. Chang Hwa Commercial | Ton Yi vs. Zinwell | Ton Yi vs. Evergreen International Storage |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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