Correlation Between Ton Yi and Far Eastern
Can any of the company-specific risk be diversified away by investing in both Ton Yi and Far Eastern 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 Far Eastern 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 Far Eastern Department, you can compare the effects of market volatilities on Ton Yi and Far Eastern 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 Far Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ton Yi and Far Eastern.
Diversification Opportunities for Ton Yi and Far Eastern
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ton and Far is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ton Yi Industrial and Far Eastern Department in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far Eastern Department 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 Far Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far Eastern Department has no effect on the direction of Ton Yi i.e., Ton Yi and Far Eastern go up and down completely randomly.
Pair Corralation between Ton Yi and Far Eastern
Assuming the 90 days trading horizon Ton Yi Industrial is expected to under-perform the Far Eastern. In addition to that, Ton Yi is 2.45 times more volatile than Far Eastern Department. It trades about -0.13 of its total potential returns per unit of risk. Far Eastern Department is currently generating about -0.13 per unit of volatility. If you would invest 2,580 in Far Eastern Department on August 30, 2024 and sell it today you would lose (55.00) from holding Far Eastern Department or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ton Yi Industrial vs. Far Eastern Department
Performance |
| Timeline |
| Ton Yi Industrial |
| Far Eastern Department |
Ton Yi and Far Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ton Yi and Far Eastern
The main advantage of trading using opposite Ton Yi and Far Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ton Yi position performs unexpectedly, Far Eastern 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 Far Eastern will offset losses from the drop in Far Eastern'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 |
| Far Eastern vs. Yulon Motor Co | Far Eastern vs. Chang Hwa Commercial | Far Eastern vs. Sinopac Financial Holdings | Far Eastern vs. Taiwan Glass Ind |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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