Correlation Between Yulon Nissan and Ares International
Can any of the company-specific risk be diversified away by investing in both Yulon Nissan and Ares International 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 Ares International 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 Ares International Corp, you can compare the effects of market volatilities on Yulon Nissan and Ares International 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 Ares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Nissan and Ares International.
Diversification Opportunities for Yulon Nissan and Ares International
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yulon and Ares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Nissan Motor and Ares International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares International 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 Ares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares International Corp has no effect on the direction of Yulon Nissan i.e., Yulon Nissan and Ares International go up and down completely randomly.
Pair Corralation between Yulon Nissan and Ares International
Assuming the 90 days trading horizon Yulon Nissan Motor is expected to under-perform the Ares International. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Nissan Motor is 1.63 times less risky than Ares International. The stock trades about -0.13 of its potential returns per unit of risk. The Ares International Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,615 in Ares International Corp on November 5, 2024 and sell it today you would earn a total of 1,425 from holding Ares International Corp or generate 39.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Nissan Motor vs. Ares International Corp
Performance |
| Timeline |
| Yulon Nissan Motor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ares International Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Yulon Nissan and Ares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Nissan and Ares International
The main advantage of trading using opposite Yulon Nissan and Ares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Nissan position performs unexpectedly, Ares International 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 Ares International will offset losses from the drop in Ares International's long position.The idea behind Yulon Nissan Motor and Ares International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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