Correlation Between Tong Yang and TYC Brother

Can any of the company-specific risk be diversified away by investing in both Tong Yang and TYC Brother 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 Tong Yang and TYC Brother into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tong Yang Industry and TYC Brother Industrial, you can compare the effects of market volatilities on Tong Yang and TYC Brother 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 Tong Yang with a short position of TYC Brother. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Yang and TYC Brother.

Diversification Opportunities for Tong Yang and TYC Brother

-0.77

Correlation Coefficient

Tong Yang  TYC Brother

Pay attention - limited upside

The 3 months correlation between Tong and TYC is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tong Yang Industry and TYC Brother Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TYC Brother Industrial and Tong Yang 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 Tong Yang Industry are associated (or correlated) with TYC Brother. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TYC Brother Industrial has no effect on the direction of Tong Yang i.e., Tong Yang and TYC Brother go up and down completely randomly.

Pair Corralation between Tong Yang and TYC Brother

Assuming the 90 days trading horizon Tong Yang Industry is expected to generate 1.44 times more return on investment than TYC Brother. However, Tong Yang is 1.44 times more volatile than TYC Brother Industrial. It trades about 0.15 of its potential returns per unit of risk. TYC Brother Industrial is currently generating about -0.14 per unit of risk. If you would invest  11,350  in Tong Yang Industry on December 29, 2024 and sell it today you would earn a total of  2,050  from holding Tong Yang Industry or generate 18.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Tong Yang Industry  vs.  TYC Brother Industrial

Tong Yang Industry

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tong Yang Industry are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tong Yang showed solid returns over the last few months and may actually be approaching a breakup point.

TYC Brother Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days TYC Brother Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Tong Yang and TYC Brother

The main advantage of trading using opposite Tong Yang and TYC Brother positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Yang position performs unexpectedly, TYC Brother 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 TYC Brother will offset losses from the drop in TYC Brother's long position.

The idea behind Tong Yang Industry and TYC Brother 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.