Correlation Between China Yuchai and TOYO Co,

Can any of the company-specific risk be diversified away by investing in both China Yuchai and TOYO Co, 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 China Yuchai and TOYO Co, into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Yuchai International and TOYO Co, Ltd, you can compare the effects of market volatilities on China Yuchai and TOYO Co, 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 China Yuchai with a short position of TOYO Co,. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Yuchai and TOYO Co,.

Diversification Opportunities for China Yuchai and TOYO Co,

-0.53

Correlation Coefficient

China Yuchai  TOYO Co,

Excellent diversification

The 3 months correlation between China and TOYO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and TOYO Co, Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOYO Co, and China Yuchai 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 China Yuchai International are associated (or correlated) with TOYO Co,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOYO Co, has no effect on the direction of China Yuchai i.e., China Yuchai and TOYO Co, go up and down completely randomly.

Pair Corralation between China Yuchai and TOYO Co,

Considering the 90-day investment horizon China Yuchai is expected to generate 2.67 times less return on investment than TOYO Co,. But when comparing it to its historical volatility, China Yuchai International is 6.84 times less risky than TOYO Co,. It trades about 0.04 of its potential returns per unit of risk. TOYO Co, Ltd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  870.00  in TOYO Co, Ltd on September 20, 2024 and sell it today you would lose (524.00) from holding TOYO Co, Ltd or give up 60.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	24.6%
Values	Daily Returns

China Yuchai International  vs.  TOYO Co, Ltd

China Yuchai Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Yuchai International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

TOYO Co,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TOYO Co, Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, TOYO Co, displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Yuchai and TOYO Co,

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

The idea behind China Yuchai International and TOYO Co, Ltd 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.