Correlation Between Everlight Electronics and Yieh United
Can any of the company-specific risk be diversified away by investing in both Everlight Electronics 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 Everlight Electronics and Yieh United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everlight Electronics Co and Yieh United Steel, you can compare the effects of market volatilities on Everlight Electronics 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 Everlight Electronics with a short position of Yieh United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everlight Electronics and Yieh United.
Diversification Opportunities for Everlight Electronics and Yieh United
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Everlight and Yieh is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Everlight Electronics 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 Everlight Electronics 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 Everlight Electronics 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 Everlight Electronics i.e., Everlight Electronics and Yieh United go up and down completely randomly.
Pair Corralation between Everlight Electronics and Yieh United
Assuming the 90 days trading horizon Everlight Electronics Co is expected to under-perform the Yieh United. In addition to that, Everlight Electronics is 1.58 times more volatile than Yieh United Steel. It trades about -0.03 of its total potential returns per unit of risk. Yieh United Steel is currently generating about 0.07 per unit of volatility. If you would invest 626.00 in Yieh United Steel on November 3, 2024 and sell it today you would earn a total of 9.00 from holding Yieh United Steel or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everlight Electronics Co vs. Yieh United Steel
Performance |
| Timeline |
| Everlight Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Yieh United Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Everlight Electronics and Yieh United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everlight Electronics and Yieh United
The main advantage of trading using opposite Everlight Electronics and Yieh United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everlight Electronics 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.The idea behind Everlight Electronics Co and Yieh United Steel 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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