Correlation Between Yulon and Hsin Ba
Can any of the company-specific risk be diversified away by investing in both Yulon and Hsin Ba 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 Hsin Ba 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 Hsin Ba Ba, you can compare the effects of market volatilities on Yulon and Hsin Ba 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 Hsin Ba. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Hsin Ba.
Diversification Opportunities for Yulon and Hsin Ba
Very poor diversification
The 3 months correlation between Yulon and Hsin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Hsin Ba Ba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsin Ba Ba 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 Hsin Ba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsin Ba Ba has no effect on the direction of Yulon i.e., Yulon and Hsin Ba go up and down completely randomly.
Pair Corralation between Yulon and Hsin Ba
Assuming the 90 days trading horizon Yulon is expected to generate 2.93 times less return on investment than Hsin Ba. But when comparing it to its historical volatility, Yulon Motor Co is 1.52 times less risky than Hsin Ba. It trades about 0.13 of its potential returns per unit of risk. Hsin Ba Ba is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 10,900 in Hsin Ba Ba on November 27, 2024 and sell it today you would earn a total of 1,000.00 from holding Hsin Ba Ba or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.12% |
| Values | Daily Returns |
Yulon Motor Co vs. Hsin Ba Ba
Performance |
| Timeline |
| Yulon Motor |
| Hsin Ba Ba |
Yulon and Hsin Ba Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Hsin Ba
The main advantage of trading using opposite Yulon and Hsin Ba positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Hsin Ba 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 Hsin Ba will offset losses from the drop in Hsin Ba's long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Hsin Ba vs. Great China Metal | Hsin Ba vs. Ton Yi Industrial | Hsin Ba vs. Ching Feng Home | Hsin Ba vs. Choice Development |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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