Correlation Between Yili Chuanning and Arcutis Biotherapeutics

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Can any of the company-specific risk be diversified away by investing in both Yili Chuanning and Arcutis Biotherapeutics 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 Yili Chuanning and Arcutis Biotherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yili Chuanning Biotechnology and Arcutis Biotherapeutics, you can compare the effects of market volatilities on Yili Chuanning and Arcutis Biotherapeutics 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 Yili Chuanning with a short position of Arcutis Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yili Chuanning and Arcutis Biotherapeutics.

Diversification Opportunities for Yili Chuanning and Arcutis Biotherapeutics

YiliArcutisDiversified AwayYiliArcutisDiversified Away100%
-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Yili and Arcutis is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Yili Chuanning Biotechnology and Arcutis Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcutis Biotherapeutics and Yili Chuanning 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 Yili Chuanning Biotechnology are associated (or correlated) with Arcutis Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcutis Biotherapeutics has no effect on the direction of Yili Chuanning i.e., Yili Chuanning and Arcutis Biotherapeutics go up and down completely randomly.

Pair Corralation between Yili Chuanning and Arcutis Biotherapeutics

Assuming the 90 days trading horizon Yili Chuanning is expected to generate 1.18 times less return on investment than Arcutis Biotherapeutics. But when comparing it to its historical volatility, Yili Chuanning Biotechnology is 1.81 times less risky than Arcutis Biotherapeutics. It trades about 0.04 of its potential returns per unit of risk. Arcutis Biotherapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,389  in Arcutis Biotherapeutics on December 4, 2024 and sell it today you would lose (8.00) from holding Arcutis Biotherapeutics or give up 0.58% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.98%
ValuesDaily Returns

Yili Chuanning Biotechnology  vs.  Arcutis Biotherapeutics

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020304050
JavaScript chart by amCharts 3.21.15301301 ARQT
       Timeline  
Yili Chuanning Biote 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Yili Chuanning Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yili Chuanning is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFebMar11.51212.51313.51414.5
Arcutis Biotherapeutics 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Arcutis Biotherapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Arcutis Biotherapeutics may actually be approaching a critical reversion point that can send shares even higher in April 2025.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar1213141516

Yili Chuanning and Arcutis Biotherapeutics Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.68-2.75-1.83-0.910.00.911.812.723.63 0.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15301301 ARQT
       Returns  

Pair Trading with Yili Chuanning and Arcutis Biotherapeutics

The main advantage of trading using opposite Yili Chuanning and Arcutis Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yili Chuanning position performs unexpectedly, Arcutis Biotherapeutics 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 Arcutis Biotherapeutics will offset losses from the drop in Arcutis Biotherapeutics' long position.
The idea behind Yili Chuanning Biotechnology and Arcutis Biotherapeutics 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.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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