Correlation Between Yulon and Falcon Power
Can any of the company-specific risk be diversified away by investing in both Yulon and Falcon Power 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 Yulon and Falcon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Motor Co and Falcon Power Co, you can compare the effects of market volatilities on Yulon and Falcon Power 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 Yulon with a short position of Falcon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Falcon Power.
Diversification Opportunities for Yulon and Falcon Power
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yulon and Falcon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Falcon Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Power and Yulon 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 Yulon Motor Co are associated (or correlated) with Falcon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Power has no effect on the direction of Yulon i.e., Yulon and Falcon Power go up and down completely randomly.
Pair Corralation between Yulon and Falcon Power
Assuming the 90 days trading horizon Yulon is expected to generate 1.32 times less return on investment than Falcon Power. In addition to that, Yulon is 1.44 times more volatile than Falcon Power Co. It trades about 0.13 of its total potential returns per unit of risk. Falcon Power Co is currently generating about 0.24 per unit of volatility. If you would invest 1,675 in Falcon Power Co on November 27, 2024 and sell it today you would earn a total of 65.00 from holding Falcon Power Co or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Motor Co vs. Falcon Power Co
Performance |
| Timeline |
| Yulon Motor |
| Falcon Power |
Yulon and Falcon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Falcon Power
The main advantage of trading using opposite Yulon and Falcon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Falcon Power 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 Falcon Power will offset losses from the drop in Falcon Power's long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Falcon Power vs. Lee Chi Enterprises | Falcon Power vs. Fortune Electric Co | Falcon Power vs. Kaulin Mfg | Falcon Power vs. Klingon Aerospace |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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