Correlation Between Tong Yang and Cayman Engley

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

Diversification Opportunities for Tong Yang and Cayman Engley

-0.54

Correlation Coefficient

Tong Yang  Cayman Engley

Excellent diversification

The 3 months correlation between Tong and Cayman is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tong Yang Industry and Cayman Engley Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayman Engley 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 Cayman Engley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayman Engley Industrial has no effect on the direction of Tong Yang i.e., Tong Yang and Cayman Engley go up and down completely randomly.

Pair Corralation between Tong Yang and Cayman Engley

Assuming the 90 days trading horizon Tong Yang Industry is expected to generate 1.36 times more return on investment than Cayman Engley. However, Tong Yang is 1.36 times more volatile than Cayman Engley Industrial. It trades about 0.06 of its potential returns per unit of risk. Cayman Engley Industrial is currently generating about -0.33 per unit of risk. If you would invest  10,500  in Tong Yang Industry on October 20, 2024 and sell it today you would earn a total of  650.00  from holding Tong Yang Industry or generate 6.19% return on investment over 90 days.

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

Tong Yang Industry  vs.  Cayman Engley Industrial

Tong Yang Industry

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tong Yang Industry are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tong Yang may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cayman Engley Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cayman Engley 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 February 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 Cayman Engley

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

The idea behind Tong Yang Industry and Cayman Engley 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.