Correlation Between Ton Yi and Taiwan Sakura
Can any of the company-specific risk be diversified away by investing in both Ton Yi and Taiwan Sakura 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 Taiwan Sakura 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 Taiwan Sakura Corp, you can compare the effects of market volatilities on Ton Yi and Taiwan Sakura 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 Taiwan Sakura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ton Yi and Taiwan Sakura.
Diversification Opportunities for Ton Yi and Taiwan Sakura
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ton and Taiwan is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ton Yi Industrial and Taiwan Sakura Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sakura Corp 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 Taiwan Sakura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sakura Corp has no effect on the direction of Ton Yi i.e., Ton Yi and Taiwan Sakura go up and down completely randomly.
Pair Corralation between Ton Yi and Taiwan Sakura
Assuming the 90 days trading horizon Ton Yi Industrial is expected to generate 1.98 times more return on investment than Taiwan Sakura. However, Ton Yi is 1.98 times more volatile than Taiwan Sakura Corp. It trades about 0.24 of its potential returns per unit of risk. Taiwan Sakura Corp is currently generating about -0.19 per unit of risk. If you would invest 1,480 in Ton Yi Industrial on November 8, 2024 and sell it today you would earn a total of 45.00 from holding Ton Yi Industrial or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Ton Yi Industrial vs. Taiwan Sakura Corp
Performance |
| Timeline |
| Ton Yi Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Taiwan Sakura Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Ton Yi and Taiwan Sakura Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ton Yi and Taiwan Sakura
The main advantage of trading using opposite Ton Yi and Taiwan Sakura positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ton Yi position performs unexpectedly, Taiwan Sakura 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 Taiwan Sakura will offset losses from the drop in Taiwan Sakura's long position.The idea behind Ton Yi Industrial and Taiwan Sakura Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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