Correlation Between Tingyi Holding and Honmyue Enterprise

Can any of the company-specific risk be diversified away by investing in both Tingyi Holding and Honmyue Enterprise 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 Tingyi Holding and Honmyue Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tingyi Holding Corp and Honmyue Enterprise Co, you can compare the effects of market volatilities on Tingyi Holding and Honmyue Enterprise 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 Tingyi Holding with a short position of Honmyue Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tingyi Holding and Honmyue Enterprise.

Diversification Opportunities for Tingyi Holding and Honmyue Enterprise

0.63

Correlation Coefficient

Tingyi Holding  Honmyue Enterprise

Poor diversification

The 3 months correlation between Tingyi and Honmyue is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tingyi Holding Corp and Honmyue Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honmyue Enterprise and Tingyi Holding 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 Tingyi Holding Corp are associated (or correlated) with Honmyue Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honmyue Enterprise has no effect on the direction of Tingyi Holding i.e., Tingyi Holding and Honmyue Enterprise go up and down completely randomly.

Pair Corralation between Tingyi Holding and Honmyue Enterprise

Assuming the 90 days trading horizon Tingyi Holding Corp is expected to under-perform the Honmyue Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, Tingyi Holding Corp is 1.02 times less risky than Honmyue Enterprise. The stock trades about -0.02 of its potential returns per unit of risk. The Honmyue Enterprise Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,230  in Honmyue Enterprise Co on September 3, 2024 and sell it today you would earn a total of  100.00  from holding Honmyue Enterprise Co or generate 8.13% return on investment over 90 days.

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

Tingyi Holding Corp  vs.  Honmyue Enterprise Co

Tingyi Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tingyi Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tingyi Holding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Honmyue Enterprise

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Honmyue Enterprise Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Honmyue Enterprise may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tingyi Holding and Honmyue Enterprise

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

The idea behind Tingyi Holding Corp and Honmyue Enterprise 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.