Correlation Between Lealea Enterprise and Ton Yi

Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise and Ton Yi 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 Lealea Enterprise and Ton Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lealea Enterprise Co and Ton Yi Industrial, you can compare the effects of market volatilities on Lealea Enterprise and Ton Yi 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 Lealea Enterprise with a short position of Ton Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and Ton Yi.

Diversification Opportunities for Lealea Enterprise and Ton Yi

0.61

Correlation Coefficient

Lealea Enterprise  Ton Yi

Poor diversification

The 3 months correlation between Lealea and Ton is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise Co and Ton Yi Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ton Yi Industrial and Lealea Enterprise 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 Lealea Enterprise Co are associated (or correlated) with Ton Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ton Yi Industrial has no effect on the direction of Lealea Enterprise i.e., Lealea Enterprise and Ton Yi go up and down completely randomly.

Pair Corralation between Lealea Enterprise and Ton Yi

Assuming the 90 days trading horizon Lealea Enterprise Co is expected to under-perform the Ton Yi. In addition to that, Lealea Enterprise is 1.03 times more volatile than Ton Yi Industrial. It trades about -0.32 of its total potential returns per unit of risk. Ton Yi Industrial is currently generating about 0.02 per unit of volatility. If you would invest  1,495  in Ton Yi Industrial on October 20, 2024 and sell it today you would earn a total of  5.00  from holding Ton Yi Industrial or generate 0.33% return on investment over 90 days.

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

Lealea Enterprise Co  vs.  Ton Yi Industrial

Lealea Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lealea Enterprise Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Ton Yi Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ton Yi Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Lealea Enterprise and Ton Yi

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

The idea behind Lealea Enterprise Co and Ton Yi 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.