Correlation Between Yulon and Yieh Phui
Can any of the company-specific risk be diversified away by investing in both Yulon and Yieh Phui 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 Yieh Phui 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 Yieh Phui Enterprise, you can compare the effects of market volatilities on Yulon and Yieh Phui 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 Yieh Phui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Yieh Phui.
Diversification Opportunities for Yulon and Yieh Phui
Poor diversification
The 3 months correlation between Yulon and Yieh is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Yieh Phui Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yieh Phui Enterprise 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 Yieh Phui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yieh Phui Enterprise has no effect on the direction of Yulon i.e., Yulon and Yieh Phui go up and down completely randomly.
Pair Corralation between Yulon and Yieh Phui
Assuming the 90 days trading horizon Yulon Motor Co is expected to under-perform the Yieh Phui. In addition to that, Yulon is 1.35 times more volatile than Yieh Phui Enterprise. It trades about -0.03 of its total potential returns per unit of risk. Yieh Phui Enterprise is currently generating about 0.01 per unit of volatility. If you would invest 1,490 in Yieh Phui Enterprise on August 29, 2024 and sell it today you would earn a total of 45.00 from holding Yieh Phui Enterprise or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Yulon Motor Co vs. Yieh Phui Enterprise
Performance |
| Timeline |
| Yulon Motor |
| Yieh Phui Enterprise |
Yulon and Yieh Phui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Yieh Phui
The main advantage of trading using opposite Yulon and Yieh Phui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Yieh Phui 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 Yieh Phui will offset losses from the drop in Yieh Phui's long position.| Yulon vs. Taiwan Semiconductor Manufacturing | Yulon vs. Hon Hai Precision | Yulon vs. MediaTek | Yulon vs. Chunghwa Telecom 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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