Correlation Between Ton Yi and Elite Material
Can any of the company-specific risk be diversified away by investing in both Ton Yi and Elite Material 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 Ton Yi and Elite Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ton Yi Industrial and Elite Material Co, you can compare the effects of market volatilities on Ton Yi and Elite Material 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 Ton Yi with a short position of Elite Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ton Yi and Elite Material.
Diversification Opportunities for Ton Yi and Elite Material
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ton and Elite is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ton Yi Industrial and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material and Ton Yi 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 Ton Yi Industrial are associated (or correlated) with Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of Ton Yi i.e., Ton Yi and Elite Material go up and down completely randomly.
Pair Corralation between Ton Yi and Elite Material
Assuming the 90 days trading horizon Ton Yi Industrial is expected to under-perform the Elite Material. But the stock apears to be less risky and, when comparing its historical volatility, Ton Yi Industrial is 1.64 times less risky than Elite Material. The stock trades about -0.12 of its potential returns per unit of risk. The Elite Material Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 44,700 in Elite Material Co on August 30, 2024 and sell it today you would earn a total of 2,050 from holding Elite Material Co or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ton Yi Industrial vs. Elite Material Co
Performance |
| Timeline |
| Ton Yi Industrial |
| Elite Material |
Ton Yi and Elite Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ton Yi and Elite Material
The main advantage of trading using opposite Ton Yi and Elite Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ton Yi position performs unexpectedly, Elite Material 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 Elite Material will offset losses from the drop in Elite Material's long position.| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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