Correlation Between Tong Yang and Actron Technology

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

Diversification Opportunities for Tong Yang and Actron Technology

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Tong and Actron is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tong Yang Industry and Actron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actron Technology 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 Actron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actron Technology has no effect on the direction of Tong Yang i.e., Tong Yang and Actron Technology go up and down completely randomly.

Pair Corralation between Tong Yang and Actron Technology

Assuming the 90 days trading horizon Tong Yang Industry is expected to generate 1.17 times more return on investment than Actron Technology. However, Tong Yang is 1.17 times more volatile than Actron Technology. It trades about 0.1 of its potential returns per unit of risk. Actron Technology is currently generating about 0.02 per unit of risk. If you would invest  4,275  in Tong Yang Industry on October 3, 2024 and sell it today you would earn a total of  6,925  from holding Tong Yang Industry or generate 161.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Tong Yang Industry  vs.  Actron Technology

 Performance 
       Timeline  
Tong Yang Industry 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Tong Yang Industry are ranked lower than 5 (%) 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.
Actron Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Actron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Actron Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tong Yang and Actron Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tong Yang and Actron Technology

The main advantage of trading using opposite Tong Yang and Actron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tong Yang position performs unexpectedly, Actron Technology 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 Actron Technology will offset losses from the drop in Actron Technology's long position.
The idea behind Tong Yang Industry and Actron Technology 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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