Correlation Between Yageo Corp and Ching Feng
Can any of the company-specific risk be diversified away by investing in both Yageo Corp and Ching Feng 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 Yageo Corp and Ching Feng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yageo Corp and Ching Feng Home, you can compare the effects of market volatilities on Yageo Corp and Ching Feng 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 Yageo Corp with a short position of Ching Feng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yageo Corp and Ching Feng.
Diversification Opportunities for Yageo Corp and Ching Feng
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yageo and Ching is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Ching Feng Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ching Feng Home and Yageo Corp 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 Yageo Corp are associated (or correlated) with Ching Feng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ching Feng Home has no effect on the direction of Yageo Corp i.e., Yageo Corp and Ching Feng go up and down completely randomly.
Pair Corralation between Yageo Corp and Ching Feng
Assuming the 90 days trading horizon Yageo Corp is expected to generate 26.25 times less return on investment than Ching Feng. In addition to that, Yageo Corp is 1.57 times more volatile than Ching Feng Home. It trades about 0.0 of its total potential returns per unit of risk. Ching Feng Home is currently generating about 0.13 per unit of volatility. If you would invest 2,880 in Ching Feng Home on November 3, 2024 and sell it today you would earn a total of 75.00 from holding Ching Feng Home or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yageo Corp vs. Ching Feng Home
Performance |
| Timeline |
| Yageo Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ching Feng Home |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Yageo Corp and Ching Feng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yageo Corp and Ching Feng
The main advantage of trading using opposite Yageo Corp and Ching Feng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yageo Corp position performs unexpectedly, Ching Feng 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 Ching Feng will offset losses from the drop in Ching Feng's long position.The idea behind Yageo Corp and Ching Feng Home 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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