Correlation Between Yulon Nissan and D Link
Can any of the company-specific risk be diversified away by investing in both Yulon Nissan and D Link 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 Nissan and D Link into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Nissan Motor and D Link Corp, you can compare the effects of market volatilities on Yulon Nissan and D Link 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 Nissan with a short position of D Link. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Nissan and D Link.
Diversification Opportunities for Yulon Nissan and D Link
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yulon and 2332 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Nissan Motor and D Link Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on D Link Corp and Yulon Nissan 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 Nissan Motor are associated (or correlated) with D Link. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of D Link Corp has no effect on the direction of Yulon Nissan i.e., Yulon Nissan and D Link go up and down completely randomly.
Pair Corralation between Yulon Nissan and D Link
Assuming the 90 days trading horizon Yulon Nissan Motor is expected to under-perform the D Link. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Nissan Motor is 1.37 times less risky than D Link. The stock trades about -0.29 of its potential returns per unit of risk. The D Link Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,395 in D Link Corp on November 5, 2024 and sell it today you would lose (60.00) from holding D Link Corp or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Nissan Motor vs. D Link Corp
Performance |
| Timeline |
| Yulon Nissan Motor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| D Link Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Yulon Nissan and D Link Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Nissan and D Link
The main advantage of trading using opposite Yulon Nissan and D Link positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Nissan position performs unexpectedly, D Link 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 D Link will offset losses from the drop in D Link's long position.The idea behind Yulon Nissan Motor and D Link Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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