Correlation Between ECOVE Environment and Yulon Finance
Can any of the company-specific risk be diversified away by investing in both ECOVE Environment and Yulon Finance 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 ECOVE Environment and Yulon Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECOVE Environment Corp and Yulon Finance Corp, you can compare the effects of market volatilities on ECOVE Environment and Yulon Finance 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 ECOVE Environment with a short position of Yulon Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECOVE Environment and Yulon Finance.
Diversification Opportunities for ECOVE Environment and Yulon Finance
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ECOVE and Yulon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ECOVE Environment Corp and Yulon Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Finance Corp and ECOVE Environment 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 ECOVE Environment Corp are associated (or correlated) with Yulon Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Finance Corp has no effect on the direction of ECOVE Environment i.e., ECOVE Environment and Yulon Finance go up and down completely randomly.
Pair Corralation between ECOVE Environment and Yulon Finance
Assuming the 90 days trading horizon ECOVE Environment Corp is expected to generate 0.45 times more return on investment than Yulon Finance. However, ECOVE Environment Corp is 2.2 times less risky than Yulon Finance. It trades about 0.06 of its potential returns per unit of risk. Yulon Finance Corp is currently generating about -0.03 per unit of risk. If you would invest 22,791 in ECOVE Environment Corp on August 28, 2024 and sell it today you would earn a total of 5,359 from holding ECOVE Environment Corp or generate 23.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECOVE Environment Corp vs. Yulon Finance Corp
Performance |
| Timeline |
| ECOVE Environment Corp |
| Yulon Finance Corp |
ECOVE Environment and Yulon Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECOVE Environment and Yulon Finance
The main advantage of trading using opposite ECOVE Environment and Yulon Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECOVE Environment position performs unexpectedly, Yulon Finance 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 Yulon Finance will offset losses from the drop in Yulon Finance's long position.| ECOVE Environment vs. Cleanaway Co | ECOVE Environment vs. Taiwan Secom Co | ECOVE Environment vs. Sunny Friend Environmental | ECOVE Environment vs. TTET Union Corp |
| Yulon Finance vs. Chailease Holding Co | Yulon Finance vs. Taiwan Secom Co | Yulon Finance vs. TTET Union Corp | Yulon Finance vs. China Steel Chemical |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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