Correlation Between Ton Yi and Shieh Yih
Can any of the company-specific risk be diversified away by investing in both Ton Yi and Shieh Yih 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 Shieh Yih 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 Shieh Yih Machinery, you can compare the effects of market volatilities on Ton Yi and Shieh Yih 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 Shieh Yih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ton Yi and Shieh Yih.
Diversification Opportunities for Ton Yi and Shieh Yih
Very weak diversification
The 3 months correlation between Ton and Shieh is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ton Yi Industrial and Shieh Yih Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shieh Yih Machinery 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 Shieh Yih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shieh Yih Machinery has no effect on the direction of Ton Yi i.e., Ton Yi and Shieh Yih go up and down completely randomly.
Pair Corralation between Ton Yi and Shieh Yih
Assuming the 90 days trading horizon Ton Yi Industrial is expected to under-perform the Shieh Yih. But the stock apears to be less risky and, when comparing its historical volatility, Ton Yi Industrial is 1.89 times less risky than Shieh Yih. The stock trades about -0.13 of its potential returns per unit of risk. The Shieh Yih Machinery is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,815 in Shieh Yih Machinery on September 25, 2024 and sell it today you would earn a total of 55.00 from holding Shieh Yih Machinery 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 |
Ton Yi Industrial vs. Shieh Yih Machinery
Performance |
Timeline |
Ton Yi Industrial |
Shieh Yih Machinery |
Ton Yi and Shieh Yih Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ton Yi and Shieh Yih
The main advantage of trading using opposite Ton Yi and Shieh Yih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ton Yi position performs unexpectedly, Shieh Yih 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 Shieh Yih will offset losses from the drop in Shieh Yih's long position.Ton Yi vs. Formosa Plastics Corp | Ton Yi vs. Formosa Chemicals Fibre | Ton Yi vs. China Steel Corp | Ton Yi vs. Formosa Petrochemical Corp |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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