Correlation Between Ton Yi and Union Insurance

Can any of the company-specific risk be diversified away by investing in both Ton Yi and Union Insurance 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 Union Insurance 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 Union Insurance Co, you can compare the effects of market volatilities on Ton Yi and Union Insurance 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 Union Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ton Yi and Union Insurance.

Diversification Opportunities for Ton Yi and Union Insurance

0.66

Correlation Coefficient

Ton Yi  Union Insurance

Poor diversification

The 3 months correlation between Ton and Union is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ton Yi Industrial and Union Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Insurance 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 Union Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Insurance has no effect on the direction of Ton Yi i.e., Ton Yi and Union Insurance go up and down completely randomly.

Pair Corralation between Ton Yi and Union Insurance

Assuming the 90 days trading horizon Ton Yi Industrial is expected to under-perform the Union Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Ton Yi Industrial is 1.81 times less risky than Union Insurance. The stock trades about -0.02 of its potential returns per unit of risk. The Union Insurance Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,615  in Union Insurance Co on October 7, 2024 and sell it today you would earn a total of  1,515  from holding Union Insurance Co or generate 93.81% return on investment over 90 days.

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

Ton Yi Industrial  vs.  Union Insurance Co

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Union Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Insurance Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Union Insurance 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 Ton Yi and Union Insurance

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

The idea behind Ton Yi Industrial and Union Insurance Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.