Correlation Between Youyou Foods Co and Dalian Thermal
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By analyzing existing cross correlation between Youyou Foods Co and Dalian Thermal Power, you can compare the effects of market volatilities on Youyou Foods Co and Dalian Thermal 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 Youyou Foods Co with a short position of Dalian Thermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youyou Foods Co and Dalian Thermal.
Diversification Opportunities for Youyou Foods Co and Dalian Thermal
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Youyou and Dalian is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Youyou Foods Co and Dalian Thermal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalian Thermal Power and Youyou Foods Co 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 Youyou Foods Co are associated (or correlated) with Dalian Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalian Thermal Power has no effect on the direction of Youyou Foods Co i.e., Youyou Foods Co and Dalian Thermal go up and down completely randomly.
Pair Corralation between Youyou Foods Co and Dalian Thermal
Assuming the 90 days trading horizon Youyou Foods Co is expected to generate 0.67 times more return on investment than Dalian Thermal. However, Youyou Foods Co is 1.5 times less risky than Dalian Thermal. It trades about 0.08 of its potential returns per unit of risk. Dalian Thermal Power is currently generating about 0.0 per unit of risk. If you would invest 668.00 in Youyou Foods Co on November 7, 2024 and sell it today you would earn a total of 308.00 from holding Youyou Foods Co or generate 46.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youyou Foods Co vs. Dalian Thermal Power
Performance |
| Timeline |
| Youyou Foods Co |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Dalian Thermal Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Youyou Foods Co and Dalian Thermal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youyou Foods Co and Dalian Thermal
The main advantage of trading using opposite Youyou Foods Co and Dalian Thermal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youyou Foods Co position performs unexpectedly, Dalian Thermal 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 Dalian Thermal will offset losses from the drop in Dalian Thermal's long position.The idea behind Youyou Foods Co and Dalian Thermal Power 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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