Correlation Between Yulon and Federal Corp
Can any of the company-specific risk be diversified away by investing in both Yulon and Federal Corp 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 Federal Corp 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 Federal Corp, you can compare the effects of market volatilities on Yulon and Federal Corp 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 Federal Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Federal Corp.
Diversification Opportunities for Yulon and Federal Corp
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yulon and Federal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Federal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal 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 Federal Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Corp has no effect on the direction of Yulon i.e., Yulon and Federal Corp go up and down completely randomly.
Pair Corralation between Yulon and Federal Corp
Assuming the 90 days trading horizon Yulon Motor Co is expected to under-perform the Federal Corp. In addition to that, Yulon is 1.14 times more volatile than Federal Corp. It trades about -0.07 of its total potential returns per unit of risk. Federal Corp is currently generating about 0.02 per unit of volatility. If you would invest 1,940 in Federal Corp on September 14, 2024 and sell it today you would earn a total of 80.00 from holding Federal Corp or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Yulon Motor Co vs. Federal Corp
Performance |
| Timeline |
| Yulon Motor |
| Federal Corp |
Yulon and Federal Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Federal Corp
The main advantage of trading using opposite Yulon and Federal Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Federal Corp 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 Federal Corp will offset losses from the drop in Federal Corp's long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Federal Corp vs. Feng Tay Enterprises | Federal Corp vs. Ruentex Development Co | Federal Corp vs. WiseChip Semiconductor | Federal Corp vs. Novatek Microelectronics Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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