Correlation Between Yulon and Sunspring Metal
Can any of the company-specific risk be diversified away by investing in both Yulon and Sunspring 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 Yulon and Sunspring Metal 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 Sunspring Metal Corp, you can compare the effects of market volatilities on Yulon and Sunspring 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 Yulon with a short position of Sunspring Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Sunspring Metal.
Diversification Opportunities for Yulon and Sunspring Metal
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yulon and Sunspring is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Sunspring Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunspring Metal Corp 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 Sunspring Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunspring Metal Corp has no effect on the direction of Yulon i.e., Yulon and Sunspring Metal go up and down completely randomly.
Pair Corralation between Yulon and Sunspring Metal
Assuming the 90 days trading horizon Yulon Motor Co is expected to under-perform the Sunspring Metal. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Motor Co is 1.19 times less risky than Sunspring Metal. The stock trades about -0.03 of its potential returns per unit of risk. The Sunspring Metal Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,206 in Sunspring Metal Corp on November 27, 2024 and sell it today you would earn a total of 939.00 from holding Sunspring Metal Corp or generate 42.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Yulon Motor Co vs. Sunspring Metal Corp
Performance |
| Timeline |
| Yulon Motor |
| Sunspring Metal Corp |
Yulon and Sunspring Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Sunspring Metal
The main advantage of trading using opposite Yulon and Sunspring Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Sunspring 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 Sunspring Metal will offset losses from the drop in Sunspring Metal's long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Sunspring Metal vs. Makalot Industrial Co | Sunspring Metal vs. Eternal Materials Co | Sunspring Metal vs. Feng Tay Enterprises | Sunspring Metal vs. Taiwan Fu Hsing |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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