Correlation Between Ton Yi and Min Aik

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

Diversification Opportunities for Ton Yi and Min Aik

0.77

Correlation Coefficient

Ton Yi  Min Aik

Poor diversification

The 3 months correlation between Ton and Min is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ton Yi Industrial and Min Aik Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Min Aik Technology 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 Min Aik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Min Aik Technology has no effect on the direction of Ton Yi i.e., Ton Yi and Min Aik go up and down completely randomly.

Pair Corralation between Ton Yi and Min Aik

Assuming the 90 days trading horizon Ton Yi Industrial is expected to generate 0.55 times more return on investment than Min Aik. However, Ton Yi Industrial is 1.82 times less risky than Min Aik. It trades about -0.12 of its potential returns per unit of risk. Min Aik Technology is currently generating about -0.14 per unit of risk. If you would invest  1,670  in Ton Yi Industrial on October 20, 2024 and sell it today you would lose (170.00) from holding Ton Yi Industrial or give up 10.18% of portfolio value over 90 days.

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

Ton Yi Industrial  vs.  Min Aik Technology

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Min Aik Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Min Aik Technology 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.

Pair Trading with Ton Yi and Min Aik

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

The idea behind Ton Yi Industrial and Min Aik Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.