Correlation Between Asia Optical and Young Optics
Can any of the company-specific risk be diversified away by investing in both Asia Optical and Young Optics 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 Asia Optical and Young Optics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Optical Co and Young Optics, you can compare the effects of market volatilities on Asia Optical and Young Optics 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 Asia Optical with a short position of Young Optics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Optical and Young Optics.
Diversification Opportunities for Asia Optical and Young Optics
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asia and Young is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Asia Optical Co and Young Optics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Optics and Asia Optical 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 Asia Optical Co are associated (or correlated) with Young Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Optics has no effect on the direction of Asia Optical i.e., Asia Optical and Young Optics go up and down completely randomly.
Pair Corralation between Asia Optical and Young Optics
Assuming the 90 days trading horizon Asia Optical Co is expected to generate 1.07 times more return on investment than Young Optics. However, Asia Optical is 1.07 times more volatile than Young Optics. It trades about 0.06 of its potential returns per unit of risk. Young Optics is currently generating about -0.03 per unit of risk. If you would invest 6,350 in Asia Optical Co on September 2, 2024 and sell it today you would earn a total of 4,400 from holding Asia Optical Co or generate 69.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Optical Co vs. Young Optics
Performance |
| Timeline |
| Asia Optical |
| Young Optics |
Asia Optical and Young Optics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Optical and Young Optics
The main advantage of trading using opposite Asia Optical and Young Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Optical position performs unexpectedly, Young Optics 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 Young Optics will offset losses from the drop in Young Optics' long position.| Asia Optical vs. LARGAN Precision Co | Asia Optical vs. Novatek Microelectronics Corp | Asia Optical vs. Genius Electronic Optical | Asia Optical vs. Catcher Technology Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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