Correlation Between ES Ceramics and YX Precious
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and YX Precious 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 ES Ceramics and YX Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ES Ceramics Technology and YX Precious Metals, you can compare the effects of market volatilities on ES Ceramics and YX Precious 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 ES Ceramics with a short position of YX Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and YX Precious.
Diversification Opportunities for ES Ceramics and YX Precious
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 0100 and 0250 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and YX Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YX Precious Metals and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with YX Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YX Precious Metals has no effect on the direction of ES Ceramics i.e., ES Ceramics and YX Precious go up and down completely randomly.
Pair Corralation between ES Ceramics and YX Precious
Assuming the 90 days trading horizon ES Ceramics Technology is expected to generate 1.89 times more return on investment than YX Precious. However, ES Ceramics is 1.89 times more volatile than YX Precious Metals. It trades about -0.08 of its potential returns per unit of risk. YX Precious Metals is currently generating about -0.29 per unit of risk. If you would invest 15.00 in ES Ceramics Technology on August 24, 2024 and sell it today you would lose (1.00) from holding ES Ceramics Technology or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ES Ceramics Technology vs. YX Precious Metals
Performance |
| Timeline |
| ES Ceramics Technology |
| YX Precious Metals |
ES Ceramics and YX Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and YX Precious
The main advantage of trading using opposite ES Ceramics and YX Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, YX Precious 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 YX Precious will offset losses from the drop in YX Precious' long position.| ES Ceramics vs. Star Media Group | ES Ceramics vs. IHH Healthcare Bhd | ES Ceramics vs. KPJ Healthcare Bhd | ES Ceramics vs. Nova Wellness Group |
| YX Precious vs. Shangri La Hotels | YX Precious vs. Datasonic Group Bhd | YX Precious vs. RHB Bank Bhd | YX Precious vs. Kossan Rubber Industries |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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