Correlation Between Evergreen International and Ton Yi
Can any of the company-specific risk be diversified away by investing in both Evergreen International 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 Evergreen International and Ton Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergreen International Storage and Ton Yi Industrial, you can compare the effects of market volatilities on Evergreen International 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 Evergreen International with a short position of Ton Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen International and Ton Yi.
Diversification Opportunities for Evergreen International and Ton Yi
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Evergreen and Ton is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen International Storag 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 Evergreen International 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 Evergreen International Storage 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 Evergreen International i.e., Evergreen International and Ton Yi go up and down completely randomly.
Pair Corralation between Evergreen International and Ton Yi
Assuming the 90 days trading horizon Evergreen International Storage is expected to under-perform the Ton Yi. In addition to that, Evergreen International is 1.22 times more volatile than Ton Yi Industrial. It trades about -0.34 of its total potential returns per unit of risk. Ton Yi Industrial is currently generating about 0.06 per unit of volatility. If you would invest 1,490 in Ton Yi Industrial on November 7, 2024 and sell it today you would earn a total of 10.00 from holding Ton Yi Industrial or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen International Storag vs. Ton Yi Industrial
Performance |
| Timeline |
| Evergreen International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ton Yi Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Evergreen International and Ton Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen International and Ton Yi
The main advantage of trading using opposite Evergreen International and Ton Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen International 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 Evergreen International Storage 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.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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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