Correlation Between Merida Industry and Tong Yang
Can any of the company-specific risk be diversified away by investing in both Merida Industry and Tong Yang 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 Merida Industry and Tong Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merida Industry Co and Tong Yang Industry, you can compare the effects of market volatilities on Merida Industry and Tong Yang 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 Merida Industry with a short position of Tong Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merida Industry and Tong Yang.
Diversification Opportunities for Merida Industry and Tong Yang
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merida and Tong is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and Tong Yang Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Yang Industry and Merida Industry 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 Merida Industry Co are associated (or correlated) with Tong Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Yang Industry has no effect on the direction of Merida Industry i.e., Merida Industry and Tong Yang go up and down completely randomly.
Pair Corralation between Merida Industry and Tong Yang
Assuming the 90 days trading horizon Merida Industry Co is expected to under-perform the Tong Yang. In addition to that, Merida Industry is 1.02 times more volatile than Tong Yang Industry. It trades about -0.33 of its total potential returns per unit of risk. Tong Yang Industry is currently generating about 0.03 per unit of volatility. If you would invest 11,100 in Tong Yang Industry on September 23, 2024 and sell it today you would earn a total of 300.00 from holding Tong Yang Industry or generate 2.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Merida Industry Co vs. Tong Yang Industry
Performance |
Timeline |
Merida Industry |
Tong Yang Industry |
Merida Industry and Tong Yang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merida Industry and Tong Yang
The main advantage of trading using opposite Merida Industry and Tong Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merida Industry position performs unexpectedly, Tong Yang 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 Tong Yang will offset losses from the drop in Tong Yang's long position.Merida Industry vs. Cheng Shin Rubber | Merida Industry vs. Uni President Enterprises Corp | Merida Industry vs. Pou Chen Corp |
Tong Yang vs. Merida Industry Co | Tong Yang vs. Cheng Shin Rubber | Tong Yang vs. Uni President Enterprises Corp | Tong Yang vs. Pou Chen Corp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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