Correlation Between Yulon and Da Cin
Can any of the company-specific risk be diversified away by investing in both Yulon and Da Cin 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 Da Cin 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 Da Cin Construction Co, you can compare the effects of market volatilities on Yulon and Da Cin 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 Da Cin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Da Cin.
Diversification Opportunities for Yulon and Da Cin
Excellent diversification
The 3 months correlation between Yulon and 2535 is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Da Cin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Cin Construction 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 Da Cin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Cin Construction has no effect on the direction of Yulon i.e., Yulon and Da Cin go up and down completely randomly.
Pair Corralation between Yulon and Da Cin
Assuming the 90 days trading horizon Yulon Motor Co is expected to under-perform the Da Cin. In addition to that, Yulon is 3.12 times more volatile than Da Cin Construction Co. It trades about -0.02 of its total potential returns per unit of risk. Da Cin Construction Co is currently generating about 0.06 per unit of volatility. If you would invest 4,975 in Da Cin Construction Co on August 29, 2024 and sell it today you would earn a total of 45.00 from holding Da Cin Construction Co or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Yulon Motor Co vs. Da Cin Construction Co
Performance |
| Timeline |
| Yulon Motor |
| Da Cin Construction |
Yulon and Da Cin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Da Cin
The main advantage of trading using opposite Yulon and Da Cin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Da Cin 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 Da Cin will offset losses from the drop in Da Cin's long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Da Cin vs. Yulon Motor Co | Da Cin vs. Far Eastern Department | Da Cin vs. China Steel Corp | Da Cin 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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