Correlation Between China Television and Ton Yi
Can any of the company-specific risk be diversified away by investing in both China Television 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 China Television and Ton Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Television Co and Ton Yi Industrial, you can compare the effects of market volatilities on China Television 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 China Television with a short position of Ton Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Television and Ton Yi.
Diversification Opportunities for China Television and Ton Yi
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Ton is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding China Television 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 China Television 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 China Television 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 China Television i.e., China Television and Ton Yi go up and down completely randomly.
Pair Corralation between China Television and Ton Yi
Assuming the 90 days trading horizon China Television Co is expected to under-perform the Ton Yi. But the stock apears to be less risky and, when comparing its historical volatility, China Television Co is 1.14 times less risky than Ton Yi. The stock trades about -0.23 of its potential returns per unit of risk. The Ton Yi Industrial is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 1,660 in Ton Yi Industrial on August 29, 2024 and sell it today you would lose (80.00) from holding Ton Yi Industrial or give up 4.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Television Co vs. Ton Yi Industrial
Performance |
| Timeline |
| China Television |
| Ton Yi Industrial |
China Television and Ton Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Television and Ton Yi
The main advantage of trading using opposite China Television and Ton Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Television 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.| China Television vs. Chunghwa Telecom Co | China Television vs. CTBC Financial Holding | China Television vs. Fubon Financial Holding | China Television vs. President Chain Store |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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