Correlation Between Tong Yang and Tsang Yow

Can any of the company-specific risk be diversified away by investing in both Tong Yang and Tsang Yow 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 Tsang Yow 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 Tsang Yow Industrial, you can compare the effects of market volatilities on Tong Yang and Tsang Yow 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 Tsang Yow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tong Yang and Tsang Yow.

Diversification Opportunities for Tong Yang and Tsang Yow

0.44

Correlation Coefficient

Tong Yang  Tsang Yow

Very weak diversification

The 3 months correlation between Tong and Tsang is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tong Yang Industry and Tsang Yow Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsang Yow 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 Tsang Yow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsang Yow Industrial has no effect on the direction of Tong Yang i.e., Tong Yang and Tsang Yow go up and down completely randomly.

Pair Corralation between Tong Yang and Tsang Yow

Assuming the 90 days trading horizon Tong Yang Industry is expected to generate 1.95 times more return on investment than Tsang Yow. However, Tong Yang is 1.95 times more volatile than Tsang Yow Industrial. It trades about 0.19 of its potential returns per unit of risk. Tsang Yow Industrial is currently generating about 0.1 per unit of risk. If you would invest  11,500  in Tong Yang Industry on December 22, 2024 and sell it today you would earn a total of  2,600  from holding Tong Yang Industry or generate 22.61% return on investment over 90 days.

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

Tong Yang Industry  vs.  Tsang Yow 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 15 (%) 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.

Tsang Yow Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tsang Yow Industrial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tsang Yow may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tong Yang and Tsang Yow

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

The idea behind Tong Yang Industry and Tsang Yow 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.