Correlation Between Yung Chi and Standard Foods
Can any of the company-specific risk be diversified away by investing in both Yung Chi and Standard Foods 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 Yung Chi and Standard Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yung Chi Paint and Standard Foods Corp, you can compare the effects of market volatilities on Yung Chi and Standard Foods 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 Yung Chi with a short position of Standard Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yung Chi and Standard Foods.
Diversification Opportunities for Yung Chi and Standard Foods
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yung and Standard is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Yung Chi Paint and Standard Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Foods Corp and Yung Chi 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 Yung Chi Paint are associated (or correlated) with Standard Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Foods Corp has no effect on the direction of Yung Chi i.e., Yung Chi and Standard Foods go up and down completely randomly.
Pair Corralation between Yung Chi and Standard Foods
Assuming the 90 days trading horizon Yung Chi Paint is expected to generate 0.85 times more return on investment than Standard Foods. However, Yung Chi Paint is 1.18 times less risky than Standard Foods. It trades about -0.06 of its potential returns per unit of risk. Standard Foods Corp is currently generating about -0.09 per unit of risk. If you would invest 8,210 in Yung Chi Paint on September 1, 2024 and sell it today you would lose (540.00) from holding Yung Chi Paint or give up 6.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Yung Chi Paint vs. Standard Foods Corp
Performance |
| Timeline |
| Yung Chi Paint |
| Standard Foods Corp |
Yung Chi and Standard Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yung Chi and Standard Foods
The main advantage of trading using opposite Yung Chi and Standard Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yung Chi position performs unexpectedly, Standard Foods 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 Standard Foods will offset losses from the drop in Standard Foods' long position.| Yung Chi vs. China Steel Chemical | Yung Chi vs. Taiwan Secom Co | Yung Chi vs. Standard Foods Corp | Yung Chi vs. Eternal Materials Co |
| Standard Foods vs. De Licacy Industrial | Standard Foods vs. Wisher Industrial Co | Standard Foods vs. Tainan Enterprises Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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