Correlation Between Yonyu Plastics and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Yonyu Plastics and Chernan Metal 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 Yonyu Plastics and Chernan Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yonyu Plastics Co and Chernan Metal Industrial, you can compare the effects of market volatilities on Yonyu Plastics and Chernan Metal 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 Yonyu Plastics with a short position of Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yonyu Plastics and Chernan Metal.
Diversification Opportunities for Yonyu Plastics and Chernan Metal
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yonyu and Chernan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Yonyu Plastics Co and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial and Yonyu Plastics 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 Yonyu Plastics Co are associated (or correlated) with Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Yonyu Plastics i.e., Yonyu Plastics and Chernan Metal go up and down completely randomly.
Pair Corralation between Yonyu Plastics and Chernan Metal
Assuming the 90 days trading horizon Yonyu Plastics is expected to generate 5.01 times less return on investment than Chernan Metal. But when comparing it to its historical volatility, Yonyu Plastics Co is 4.55 times less risky than Chernan Metal. It trades about 0.11 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,490 in Chernan Metal Industrial on November 3, 2024 and sell it today you would earn a total of 135.00 from holding Chernan Metal Industrial or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yonyu Plastics Co vs. Chernan Metal Industrial
Performance |
| Timeline |
| Yonyu Plastics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Chernan Metal Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Yonyu Plastics and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yonyu Plastics and Chernan Metal
The main advantage of trading using opposite Yonyu Plastics and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yonyu Plastics position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.The idea behind Yonyu Plastics Co and Chernan Metal 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.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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