Correlation Between Tong Yang and Yusin Holding

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

Diversification Opportunities for Tong Yang and Yusin Holding

0.69

Correlation Coefficient

Tong Yang  Yusin Holding

Poor diversification

The 3 months correlation between Tong and Yusin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tong Yang Industry and Yusin Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yusin Holding Corp 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 Yusin Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yusin Holding Corp has no effect on the direction of Tong Yang i.e., Tong Yang and Yusin Holding go up and down completely randomly.

Pair Corralation between Tong Yang and Yusin Holding

Assuming the 90 days trading horizon Tong Yang Industry is expected to generate 0.9 times more return on investment than Yusin Holding. However, Tong Yang Industry is 1.11 times less risky than Yusin Holding. It trades about 0.17 of its potential returns per unit of risk. Yusin Holding Corp is currently generating about 0.15 per unit of risk. If you would invest  9,500  in Tong Yang Industry on September 4, 2024 and sell it today you would earn a total of  2,300  from holding Tong Yang Industry or generate 24.21% return on investment over 90 days.

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

Tong Yang Industry  vs.  Yusin Holding Corp

Tong Yang Industry

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tong Yang Industry are ranked lower than 13 (%) 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.

Yusin Holding Corp

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Tong Yang and Yusin Holding

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

The idea behind Tong Yang Industry and Yusin Holding 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.