Correlation Between Sincere Navigation and Ton Yi

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

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

Diversification Opportunities for Sincere Navigation and Ton Yi

0.23

Correlation Coefficient

Sincere Navigation  Ton Yi

Modest diversification

The 3 months correlation between Sincere and Ton is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sincere Navigation Corp 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 Sincere Navigation 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 Sincere Navigation Corp 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 Sincere Navigation i.e., Sincere Navigation and Ton Yi go up and down completely randomly.

Pair Corralation between Sincere Navigation and Ton Yi

Assuming the 90 days trading horizon Sincere Navigation Corp is expected to generate 1.41 times more return on investment than Ton Yi. However, Sincere Navigation is 1.41 times more volatile than Ton Yi Industrial. It trades about 0.0 of its potential returns per unit of risk. Ton Yi Industrial is currently generating about -0.02 per unit of risk. If you would invest  2,675  in Sincere Navigation Corp on September 3, 2024 and sell it today you would lose (40.00) from holding Sincere Navigation Corp or give up 1.5% of portfolio value over 90 days.

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

Sincere Navigation Corp  vs.  Ton Yi Industrial

Sincere Navigation Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sincere Navigation Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sincere Navigation is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the 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 fairly stable basic indicators, Ton Yi is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sincere Navigation and Ton Yi

The main advantage of trading using opposite Sincere Navigation and Ton Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sincere Navigation 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 Sincere Navigation Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.