Correlation Between Chia Her and Tong Yang

Can any of the company-specific risk be diversified away by investing in both Chia Her and Tong Yang 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 Chia Her and Tong Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chia Her Industrial and Tong Yang Industry, you can compare the effects of market volatilities on Chia Her and Tong Yang 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 Chia Her with a short position of Tong Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Her and Tong Yang.

Diversification Opportunities for Chia Her and Tong Yang

-0.54

Correlation Coefficient

Chia Her  Tong Yang

Excellent diversification

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

Pair Corralation between Chia Her and Tong Yang

Assuming the 90 days trading horizon Chia Her Industrial is expected to under-perform the Tong Yang. But the stock apears to be less risky and, when comparing its historical volatility, Chia Her Industrial is 1.15 times less risky than Tong Yang. The stock trades about -0.25 of its potential returns per unit of risk. The Tong Yang Industry is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  11,450  in Tong Yang Industry on December 26, 2024 and sell it today you would earn a total of  2,200  from holding Tong Yang Industry or generate 19.21% return on investment over 90 days.

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

Chia Her Industrial  vs.  Tong Yang Industry

Chia Her Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chia Her 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 12 (%) 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.

Pair Trading with Chia Her and Tong Yang

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

The idea behind Chia Her Industrial and Tong Yang Industry 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.