Correlation Between Associated Industries and Ton Yi

Can any of the company-specific risk be diversified away by investing in both Associated Industries and Ton Yi 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 Associated Industries and Ton Yi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Industries China and Ton Yi Industrial, you can compare the effects of market volatilities on Associated Industries and Ton Yi 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 Associated Industries with a short position of Ton Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Industries and Ton Yi.

Diversification Opportunities for Associated Industries and Ton Yi

0.84

Correlation Coefficient

Associated Industries  Ton Yi

Very poor diversification

The 3 months correlation between Associated and Ton is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Associated Industries China and Ton Yi Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ton Yi Industrial and Associated Industries 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 Associated Industries China are associated (or correlated) with Ton Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ton Yi Industrial has no effect on the direction of Associated Industries i.e., Associated Industries and Ton Yi go up and down completely randomly.

Pair Corralation between Associated Industries and Ton Yi

Assuming the 90 days trading horizon Associated Industries China is expected to under-perform the Ton Yi. But the stock apears to be less risky and, when comparing its historical volatility, Associated Industries China is 1.18 times less risky than Ton Yi. The stock trades about -0.17 of its potential returns per unit of risk. The Ton Yi Industrial is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,520  in Ton Yi Industrial on October 22, 2024 and sell it today you would lose (20.00) from holding Ton Yi Industrial or give up 1.32% of portfolio value over 90 days.

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

Associated Industries China  vs.  Ton Yi Industrial

Associated Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated Industries China 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.

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.

Pair Trading with Associated Industries and Ton Yi

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

The idea behind Associated Industries China and Ton Yi Industrial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.