Correlation Between Yuan High and Advanced Wireless
Can any of the company-specific risk be diversified away by investing in both Yuan High and Advanced Wireless 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 Advanced Wireless 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 Advanced Wireless Semiconductor, you can compare the effects of market volatilities on Yuan High and Advanced Wireless 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 Advanced Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuan High and Advanced Wireless.
Diversification Opportunities for Yuan High and Advanced Wireless
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yuan and Advanced is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Yuan High Tech Development and Advanced Wireless Semiconducto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Wireless 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 Advanced Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Wireless has no effect on the direction of Yuan High i.e., Yuan High and Advanced Wireless go up and down completely randomly.
Pair Corralation between Yuan High and Advanced Wireless
Assuming the 90 days trading horizon Yuan High Tech Development is expected to generate 1.44 times more return on investment than Advanced Wireless. However, Yuan High is 1.44 times more volatile than Advanced Wireless Semiconductor. It trades about -0.07 of its potential returns per unit of risk. Advanced Wireless Semiconductor is currently generating about -0.2 per unit of risk. If you would invest 19,650 in Yuan High Tech Development on November 3, 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. Advanced Wireless Semiconducto
Performance |
| Timeline |
| Yuan High Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Advanced Wireless |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Yuan High and Advanced Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuan High and Advanced Wireless
The main advantage of trading using opposite Yuan High and Advanced Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuan High position performs unexpectedly, Advanced Wireless 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 Advanced Wireless will offset losses from the drop in Advanced Wireless' long position.The idea behind Yuan High Tech Development and Advanced Wireless Semiconductor 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 Stocks Directory module to find actively traded stocks across global markets.
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