Correlation Between Yuan High and Chicony Power
Can any of the company-specific risk be diversified away by investing in both Yuan High and Chicony Power 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 Chicony Power 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 Chicony Power Technology, you can compare the effects of market volatilities on Yuan High and Chicony Power 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 Chicony Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuan High and Chicony Power.
Diversification Opportunities for Yuan High and Chicony Power
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yuan and Chicony is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Yuan High Tech Development and Chicony Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Power Technology 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 Chicony Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Power Technology has no effect on the direction of Yuan High i.e., Yuan High and Chicony Power go up and down completely randomly.
Pair Corralation between Yuan High and Chicony Power
Assuming the 90 days trading horizon Yuan High Tech Development is expected to under-perform the Chicony Power. In addition to that, Yuan High is 2.48 times more volatile than Chicony Power Technology. It trades about -0.05 of its total potential returns per unit of risk. Chicony Power Technology is currently generating about -0.01 per unit of volatility. If you would invest 12,550 in Chicony Power Technology on November 7, 2024 and sell it today you would lose (50.00) from holding Chicony Power Technology or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuan High Tech Development vs. Chicony Power Technology
Performance |
| Timeline |
| Yuan High Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Chicony Power Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Yuan High and Chicony Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuan High and Chicony Power
The main advantage of trading using opposite Yuan High and Chicony Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuan High position performs unexpectedly, Chicony Power 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 Chicony Power will offset losses from the drop in Chicony Power's long position.The idea behind Yuan High Tech Development and Chicony Power Technology 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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