Correlation Between Yageo Corp and Tong Hsing

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

By analyzing existing cross correlation between Yageo Corp and Tong Hsing Electronic, you can compare the effects of market volatilities on Yageo Corp and Tong Hsing 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 Yageo Corp with a short position of Tong Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yageo Corp and Tong Hsing.

Diversification Opportunities for Yageo Corp and Tong Hsing

0.06

Correlation Coefficient

Yageo Corp  Tong Hsing

Significant diversification

The 3 months correlation between Yageo and Tong is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Tong Hsing Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hsing Electronic and Yageo Corp 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 Yageo Corp are associated (or correlated) with Tong Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hsing Electronic has no effect on the direction of Yageo Corp i.e., Yageo Corp and Tong Hsing go up and down completely randomly.

Pair Corralation between Yageo Corp and Tong Hsing

Assuming the 90 days trading horizon Yageo Corp is expected to generate 0.98 times more return on investment than Tong Hsing. However, Yageo Corp is 1.02 times less risky than Tong Hsing. It trades about 0.08 of its potential returns per unit of risk. Tong Hsing Electronic is currently generating about -0.04 per unit of risk. If you would invest  52,500  in Yageo Corp on December 3, 2024 and sell it today you would earn a total of  4,100  from holding Yageo Corp or generate 7.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Yageo Corp  vs.  Tong Hsing Electronic

Yageo Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yageo Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yageo Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tong Hsing Electronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tong Hsing Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tong Hsing 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 Yageo Corp and Tong Hsing

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

The idea behind Yageo Corp and Tong Hsing Electronic 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.