Correlation Between Namchow Food and Tongyu Communication

Can any of the company-specific risk be diversified away by investing in both Namchow Food and Tongyu Communication 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 Namchow Food and Tongyu Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Namchow Food Group and Tongyu Communication, you can compare the effects of market volatilities on Namchow Food and Tongyu Communication 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 Namchow Food with a short position of Tongyu Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namchow Food and Tongyu Communication.

Diversification Opportunities for Namchow Food and Tongyu Communication

0.03

Correlation Coefficient

Namchow Food  Tongyu Communication

Significant diversification

The 3 months correlation between Namchow and Tongyu is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Namchow Food Group and Tongyu Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongyu Communication and Namchow Food 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 Namchow Food Group are associated (or correlated) with Tongyu Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongyu Communication has no effect on the direction of Namchow Food i.e., Namchow Food and Tongyu Communication go up and down completely randomly.

Pair Corralation between Namchow Food and Tongyu Communication

Assuming the 90 days trading horizon Namchow Food is expected to generate 1.64 times less return on investment than Tongyu Communication. But when comparing it to its historical volatility, Namchow Food Group is 1.13 times less risky than Tongyu Communication. It trades about 0.06 of its potential returns per unit of risk. Tongyu Communication is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,448  in Tongyu Communication on April 24, 2025 and sell it today you would earn a total of  118.00  from holding Tongyu Communication or generate 8.15% return on investment over 90 days.

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

Namchow Food Group  vs.  Tongyu Communication

Namchow Food Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Namchow Food Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Namchow Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tongyu Communication

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tongyu Communication are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tongyu Communication may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Namchow Food and Tongyu Communication

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

The idea behind Namchow Food Group and Tongyu Communication 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.