Correlation Between Ton Yi and Advanced Ceramic

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

Diversification Opportunities for Ton Yi and Advanced Ceramic

0.04

Correlation Coefficient

Ton Yi  Advanced Ceramic

Significant diversification

The 3 months correlation between Ton and Advanced is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ton Yi Industrial and Advanced Ceramic X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Ceramic X 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 Advanced Ceramic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Ceramic X has no effect on the direction of Ton Yi i.e., Ton Yi and Advanced Ceramic go up and down completely randomly.

Pair Corralation between Ton Yi and Advanced Ceramic

Assuming the 90 days trading horizon Ton Yi Industrial is expected to generate 0.49 times more return on investment than Advanced Ceramic. However, Ton Yi Industrial is 2.06 times less risky than Advanced Ceramic. It trades about 0.06 of its potential returns per unit of risk. Advanced Ceramic X is currently generating about -0.09 per unit of risk. If you would invest  1,575  in Ton Yi Industrial on December 4, 2024 and sell it today you would earn a total of  50.00  from holding Ton Yi Industrial or generate 3.17% return on investment over 90 days.

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

Ton Yi Industrial  vs.  Advanced Ceramic X

Ton Yi Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ton Yi Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Advanced Ceramic X

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Ceramic X 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.

Pair Trading with Ton Yi and Advanced Ceramic

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

The idea behind Ton Yi Industrial and Advanced Ceramic X 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..