Correlation Between Aofu Environmental and Youyou Foods

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Aofu Environmental and Youyou Foods 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 Aofu Environmental and Youyou Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aofu Environmental Technology and Youyou Foods Co, you can compare the effects of market volatilities on Aofu Environmental and Youyou Foods 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 Aofu Environmental with a short position of Youyou Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aofu Environmental and Youyou Foods.

Diversification Opportunities for Aofu Environmental and Youyou Foods

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Aofu and Youyou is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aofu Environmental Technology and Youyou Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youyou Foods and Aofu Environmental 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 Aofu Environmental Technology are associated (or correlated) with Youyou Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youyou Foods has no effect on the direction of Aofu Environmental i.e., Aofu Environmental and Youyou Foods go up and down completely randomly.

Pair Corralation between Aofu Environmental and Youyou Foods

Assuming the 90 days trading horizon Aofu Environmental is expected to generate 2.73 times less return on investment than Youyou Foods. But when comparing it to its historical volatility, Aofu Environmental Technology is 1.59 times less risky than Youyou Foods. It trades about 0.08 of its potential returns per unit of risk. Youyou Foods Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  909.00  in Youyou Foods Co on September 6, 2024 and sell it today you would earn a total of  116.00  from holding Youyou Foods Co or generate 12.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Aofu Environmental Technology  vs.  Youyou Foods Co

 Performance 
       Timeline  
Aofu Environmental 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Aofu Environmental Technology are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aofu Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.
Youyou Foods 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Youyou Foods Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Youyou Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Aofu Environmental and Youyou Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aofu Environmental and Youyou Foods

The main advantage of trading using opposite Aofu Environmental and Youyou Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aofu Environmental position performs unexpectedly, Youyou Foods 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 Youyou Foods will offset losses from the drop in Youyou Foods' long position.
The idea behind Aofu Environmental Technology and Youyou Foods Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

Other Complementary Tools

Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Positions Ratings
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
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance