Correlation Between Ton Yi and Awea Mechantronic
Can any of the company-specific risk be diversified away by investing in both Ton Yi and Awea Mechantronic 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 Ton Yi and Awea Mechantronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ton Yi Industrial and Awea Mechantronic Co, you can compare the effects of market volatilities on Ton Yi and Awea Mechantronic 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 Ton Yi with a short position of Awea Mechantronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ton Yi and Awea Mechantronic.
Diversification Opportunities for Ton Yi and Awea Mechantronic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ton and Awea is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ton Yi Industrial and Awea Mechantronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awea Mechantronic and Ton Yi 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 Ton Yi Industrial are associated (or correlated) with Awea Mechantronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awea Mechantronic has no effect on the direction of Ton Yi i.e., Ton Yi and Awea Mechantronic go up and down completely randomly.
Pair Corralation between Ton Yi and Awea Mechantronic
Assuming the 90 days trading horizon Ton Yi is expected to generate 3.67 times less return on investment than Awea Mechantronic. But when comparing it to its historical volatility, Ton Yi Industrial is 1.09 times less risky than Awea Mechantronic. It trades about 0.02 of its potential returns per unit of risk. Awea Mechantronic Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,985 in Awea Mechantronic Co on October 20, 2024 and sell it today you would earn a total of 45.00 from holding Awea Mechantronic Co or generate 1.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Ton Yi Industrial vs. Awea Mechantronic Co
Performance |
Timeline |
Ton Yi Industrial |
Awea Mechantronic |
Ton Yi and Awea Mechantronic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ton Yi and Awea Mechantronic
The main advantage of trading using opposite Ton Yi and Awea Mechantronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ton Yi position performs unexpectedly, Awea Mechantronic 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 Awea Mechantronic will offset losses from the drop in Awea Mechantronic's long position.Ton Yi vs. Far Eastern Department | Ton Yi vs. Chang Hwa Commercial | Ton Yi vs. Zinwell | Ton Yi vs. Evergreen International Storage |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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