Correlation Between ALFORMER Industrial and Ton Yi

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

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

Diversification Opportunities for ALFORMER Industrial and Ton Yi

-0.47

Correlation Coefficient

ALFORMER Industrial  Ton Yi

Very good diversification

The 3 months correlation between ALFORMER and Ton is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ALFORMER Industrial 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 ALFORMER 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 ALFORMER Industrial 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 ALFORMER Industrial i.e., ALFORMER Industrial and Ton Yi go up and down completely randomly.

Pair Corralation between ALFORMER Industrial and Ton Yi

Assuming the 90 days trading horizon ALFORMER Industrial Co is expected to generate 3.38 times more return on investment than Ton Yi. However, ALFORMER Industrial is 3.38 times more volatile than Ton Yi Industrial. It trades about 0.13 of its potential returns per unit of risk. Ton Yi Industrial is currently generating about -0.06 per unit of risk. If you would invest  2,775  in ALFORMER Industrial Co on September 13, 2024 and sell it today you would earn a total of  925.00  from holding ALFORMER Industrial Co or generate 33.33% return on investment over 90 days.

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

ALFORMER Industrial Co  vs.  Ton Yi Industrial

ALFORMER Industrial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALFORMER Industrial Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ALFORMER Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

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 fairly stable basic indicators, Ton Yi 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 ALFORMER Industrial and Ton Yi

The main advantage of trading using opposite ALFORMER Industrial and Ton Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALFORMER Industrial 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 ALFORMER Industrial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.