Correlation Between China Development and Yulon Finance
Can any of the company-specific risk be diversified away by investing in both China Development and Yulon Finance 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 China Development and Yulon Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Development Financial and Yulon Finance Corp, you can compare the effects of market volatilities on China Development and Yulon Finance 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 China Development with a short position of Yulon Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and Yulon Finance.
Diversification Opportunities for China Development and Yulon Finance
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Yulon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and Yulon Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Finance Corp and China Development 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 China Development Financial are associated (or correlated) with Yulon Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Finance Corp has no effect on the direction of China Development i.e., China Development and Yulon Finance go up and down completely randomly.
Pair Corralation between China Development and Yulon Finance
Assuming the 90 days trading horizon China Development Financial is expected to generate 0.43 times more return on investment than Yulon Finance. However, China Development Financial is 2.34 times less risky than Yulon Finance. It trades about 0.12 of its potential returns per unit of risk. Yulon Finance Corp is currently generating about -0.3 per unit of risk. If you would invest 1,675 in China Development Financial on August 31, 2024 and sell it today you would earn a total of 45.00 from holding China Development Financial or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Development Financial vs. Yulon Finance Corp
Performance |
| Timeline |
| China Development |
| Yulon Finance Corp |
China Development and Yulon Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and Yulon Finance
The main advantage of trading using opposite China Development and Yulon Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, Yulon Finance 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 Yulon Finance will offset losses from the drop in Yulon Finance's long position.| China Development vs. Cathay Financial Holding | China Development vs. Mega Financial Holding | China Development vs. CTBC Financial Holding | China Development vs. Fubon Financial Holding |
| Yulon Finance vs. Chailease Holding Co | Yulon Finance vs. Taiwan Secom Co | Yulon Finance vs. TTET Union Corp | Yulon Finance vs. China Steel Chemical |
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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