Correlation Between YungShin Global and First Hotel
Can any of the company-specific risk be diversified away by investing in both YungShin Global and First Hotel 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 YungShin Global and First Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YungShin Global Holding and First Hotel Co, you can compare the effects of market volatilities on YungShin Global and First Hotel 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 YungShin Global with a short position of First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of YungShin Global and First Hotel.
Diversification Opportunities for YungShin Global and First Hotel
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between YungShin and First is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding YungShin Global Holding and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel and YungShin Global 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 YungShin Global Holding are associated (or correlated) with First Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hotel has no effect on the direction of YungShin Global i.e., YungShin Global and First Hotel go up and down completely randomly.
Pair Corralation between YungShin Global and First Hotel
Assuming the 90 days trading horizon YungShin Global Holding is expected to under-perform the First Hotel. But the stock apears to be less risky and, when comparing its historical volatility, YungShin Global Holding is 1.94 times less risky than First Hotel. The stock trades about -0.3 of its potential returns per unit of risk. The First Hotel Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,450 in First Hotel Co on November 2, 2024 and sell it today you would earn a total of 30.00 from holding First Hotel Co or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
YungShin Global Holding vs. First Hotel Co
Performance |
| Timeline |
| YungShin Global Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Hotel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
YungShin Global and First Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YungShin Global and First Hotel
The main advantage of trading using opposite YungShin Global and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YungShin Global position performs unexpectedly, First Hotel 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 First Hotel will offset losses from the drop in First Hotel's long position.The idea behind YungShin Global Holding and First Hotel Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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