Correlation Between Shuang Bang and Ton Yi

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

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

Diversification Opportunities for Shuang Bang and Ton Yi

0.54

Correlation Coefficient

Shuang Bang  Ton Yi

Very weak diversification

The 3 months correlation between Shuang and Ton is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Shuang Bang Industrial 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 Shuang Bang 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 Shuang Bang Industrial 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 Shuang Bang i.e., Shuang Bang and Ton Yi go up and down completely randomly.

Pair Corralation between Shuang Bang and Ton Yi

Assuming the 90 days trading horizon Shuang Bang Industrial is expected to generate 2.26 times more return on investment than Ton Yi. However, Shuang Bang is 2.26 times more volatile than Ton Yi Industrial. It trades about 0.02 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  1,740  in Shuang Bang Industrial on September 13, 2024 and sell it today you would earn a total of  25.00  from holding Shuang Bang Industrial or generate 1.44% return on investment over 90 days.

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

Shuang Bang Industrial  vs.  Ton Yi Industrial

Shuang Bang Industrial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shuang Bang Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shuang Bang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 Shuang Bang and Ton Yi

The main advantage of trading using opposite Shuang Bang and Ton Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shuang Bang 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 Shuang Bang Industrial 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.