Correlation Between Ton Yi and Chailease Holding

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

Diversification Opportunities for Ton Yi and Chailease Holding

0.93

Correlation Coefficient

Ton Yi  Chailease Holding

Almost no diversification

The 3 months correlation between Ton and Chailease is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ton Yi Industrial and Chailease Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chailease Holding 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 Chailease Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chailease Holding has no effect on the direction of Ton Yi i.e., Ton Yi and Chailease Holding go up and down completely randomly.

Pair Corralation between Ton Yi and Chailease Holding

Assuming the 90 days trading horizon Ton Yi Industrial is expected to generate 0.63 times more return on investment than Chailease Holding. However, Ton Yi Industrial is 1.59 times less risky than Chailease Holding. It trades about -0.16 of its potential returns per unit of risk. Chailease Holding Co is currently generating about -0.24 per unit of risk. If you would invest  1,705  in Ton Yi Industrial on October 7, 2024 and sell it today you would lose (220.00) from holding Ton Yi Industrial or give up 12.9% of portfolio value over 90 days.

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

Ton Yi Industrial  vs.  Chailease Holding 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 weak 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.

Chailease Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chailease Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Chailease Holding

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

The idea behind Ton Yi Industrial and Chailease Holding 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.