Correlation Between Hota Industrial and Tong Yang

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

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

Diversification Opportunities for Hota Industrial and Tong Yang

0.27

Correlation Coefficient

Hota Industrial  Tong Yang

Modest diversification

The 3 months correlation between Hota and Tong is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hota Industrial Mfg 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 Hota Industrial 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 Hota Industrial Mfg 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 Hota Industrial i.e., Hota Industrial and Tong Yang go up and down completely randomly.

Pair Corralation between Hota Industrial and Tong Yang

Assuming the 90 days trading horizon Hota Industrial is expected to generate 1.93 times less return on investment than Tong Yang. In addition to that, Hota Industrial is 1.46 times more volatile than Tong Yang Industry. It trades about 0.06 of its total potential returns per unit of risk. Tong Yang Industry is currently generating about 0.16 per unit of volatility. 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hota Industrial Mfg  vs.  Tong Yang Industry

Hota Industrial Mfg

Risk-Adjusted Performance

Insignificant

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

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 Hota Industrial and Tong Yang

The main advantage of trading using opposite Hota Industrial and Tong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hota Industrial 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 Hota Industrial Mfg 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.