Correlation Between Yulon and Tong Yang

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

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

Diversification Opportunities for Yulon and Tong Yang

-0.04

Correlation Coefficient

Yulon  Tong Yang

Good diversification

The 3 months correlation between Yulon and Tong is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co 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 Yulon 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 Yulon Motor Co 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 Yulon i.e., Yulon and Tong Yang go up and down completely randomly.

Pair Corralation between Yulon and Tong Yang

Assuming the 90 days trading horizon Yulon is expected to generate 2.22 times less return on investment than Tong Yang. In addition to that, Yulon is 1.12 times more volatile than Tong Yang Industry. It trades about 0.02 of its total potential returns per unit of risk. Tong Yang Industry is currently generating about 0.05 per unit of volatility. If you would invest  10,500  in Tong Yang Industry on September 12, 2024 and sell it today you would earn a total of  500.00  from holding Tong Yang Industry or generate 4.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Yulon Motor Co  vs.  Tong Yang Industry

Yulon Motor

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yulon Motor Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Yulon 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 Industry

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tong Yang Industry are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tong Yang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Yulon and Tong Yang

The main advantage of trading using opposite Yulon and Tong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon 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 Yulon Motor Co 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.