Correlation Between Yulon and Yieh United
Can any of the company-specific risk be diversified away by investing in both Yulon and Yieh United 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 United 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 United Steel, you can compare the effects of market volatilities on Yulon and Yieh United 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 United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Yieh United.
Diversification Opportunities for Yulon and Yieh United
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yulon and Yieh is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Yieh United Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yieh United Steel 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 United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yieh United Steel has no effect on the direction of Yulon i.e., Yulon and Yieh United go up and down completely randomly.
Pair Corralation between Yulon and Yieh United
Assuming the 90 days trading horizon Yulon Motor Co is expected to generate 1.29 times more return on investment than Yieh United. However, Yulon is 1.29 times more volatile than Yieh United Steel. It trades about 0.0 of its potential returns per unit of risk. Yieh United Steel is currently generating about -0.02 per unit of risk. If you would invest 6,300 in Yulon Motor Co on August 29, 2024 and sell it today you would lose (750.00) from holding Yulon Motor Co or give up 11.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Motor Co vs. Yieh United Steel
Performance |
| Timeline |
| Yulon Motor |
| Yieh United Steel |
Yulon and Yieh United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Yieh United
The main advantage of trading using opposite Yulon and Yieh United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Yieh United 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 United will offset losses from the drop in Yieh United's long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Yieh United vs. Shan Loong Transportation Co | Yieh United vs. Sunmax Biotechnology Co | Yieh United vs. Insyde Software | Yieh United vs. Apex Biotechnology 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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