Correlation Between Eastern Communications and YiDong Electronics
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By analyzing existing cross correlation between Eastern Communications Co and YiDong Electronics Technology, you can compare the effects of market volatilities on Eastern Communications and YiDong Electronics 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 Eastern Communications with a short position of YiDong Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Communications and YiDong Electronics.
Diversification Opportunities for Eastern Communications and YiDong Electronics
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastern and YiDong is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Communications Co and YiDong Electronics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YiDong Electronics and Eastern Communications 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 Eastern Communications Co are associated (or correlated) with YiDong Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YiDong Electronics has no effect on the direction of Eastern Communications i.e., Eastern Communications and YiDong Electronics go up and down completely randomly.
Pair Corralation between Eastern Communications and YiDong Electronics
Assuming the 90 days trading horizon Eastern Communications Co is expected to under-perform the YiDong Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Communications Co is 1.83 times less risky than YiDong Electronics. The stock trades about -0.14 of its potential returns per unit of risk. The YiDong Electronics Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,959 in YiDong Electronics Technology on October 18, 2024 and sell it today you would earn a total of 255.00 from holding YiDong Electronics Technology or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Communications Co vs. YiDong Electronics Technology
Performance |
| Timeline |
| Eastern Communications |
| YiDong Electronics |
Eastern Communications and YiDong Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Communications and YiDong Electronics
The main advantage of trading using opposite Eastern Communications and YiDong Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Communications position performs unexpectedly, YiDong Electronics 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 YiDong Electronics will offset losses from the drop in YiDong Electronics' long position.The idea behind Eastern Communications Co and YiDong Electronics 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.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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