Correlation Between Yulon and Airtac International
Can any of the company-specific risk be diversified away by investing in both Yulon and Airtac International 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 Airtac International 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 Airtac International Group, you can compare the effects of market volatilities on Yulon and Airtac International 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 Airtac International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Airtac International.
Diversification Opportunities for Yulon and Airtac International
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yulon and Airtac is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Airtac International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtac International 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 Airtac International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtac International has no effect on the direction of Yulon i.e., Yulon and Airtac International go up and down completely randomly.
Pair Corralation between Yulon and Airtac International
Assuming the 90 days trading horizon Yulon Motor Co is expected to under-perform the Airtac International. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Motor Co is 1.3 times less risky than Airtac International. The stock trades about -0.08 of its potential returns per unit of risk. The Airtac International Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 102,000 in Airtac International Group on August 29, 2024 and sell it today you would lose (22,500) from holding Airtac International Group or give up 22.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Motor Co vs. Airtac International Group
Performance |
| Timeline |
| Yulon Motor |
| Airtac International |
Yulon and Airtac International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Airtac International
The main advantage of trading using opposite Yulon and Airtac International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Airtac International 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 Airtac International will offset losses from the drop in Airtac International's long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Airtac International vs. Yulon Motor Co | Airtac International vs. Far Eastern Department | Airtac International vs. China Steel Corp | Airtac International vs. Chang Hwa Commercial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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