Correlation Between Yuan High and AzureWave Technologies
Can any of the company-specific risk be diversified away by investing in both Yuan High and AzureWave Technologies 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 Yuan High and AzureWave Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yuan High Tech Development and AzureWave Technologies, you can compare the effects of market volatilities on Yuan High and AzureWave Technologies 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 Yuan High with a short position of AzureWave Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuan High and AzureWave Technologies.
Diversification Opportunities for Yuan High and AzureWave Technologies
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yuan and AzureWave is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Yuan High Tech Development and AzureWave Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AzureWave Technologies and Yuan High 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 Yuan High Tech Development are associated (or correlated) with AzureWave Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AzureWave Technologies has no effect on the direction of Yuan High i.e., Yuan High and AzureWave Technologies go up and down completely randomly.
Pair Corralation between Yuan High and AzureWave Technologies
Assuming the 90 days trading horizon Yuan High Tech Development is expected to generate 1.18 times more return on investment than AzureWave Technologies. However, Yuan High is 1.18 times more volatile than AzureWave Technologies. It trades about -0.07 of its potential returns per unit of risk. AzureWave Technologies is currently generating about -0.15 per unit of risk. If you would invest 19,650 in Yuan High Tech Development on November 2, 2024 and sell it today you would lose (1,350) from holding Yuan High Tech Development or give up 6.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuan High Tech Development vs. AzureWave Technologies
Performance |
| Timeline |
| Yuan High Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| AzureWave Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Yuan High and AzureWave Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuan High and AzureWave Technologies
The main advantage of trading using opposite Yuan High and AzureWave Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuan High position performs unexpectedly, AzureWave Technologies 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 AzureWave Technologies will offset losses from the drop in AzureWave Technologies' long position.The idea behind Yuan High Tech Development and AzureWave Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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