Correlation Between Giant Manufacturing and YCC Parts
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and YCC Parts 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 Giant Manufacturing and YCC Parts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Giant Manufacturing Co and YCC Parts MFG, you can compare the effects of market volatilities on Giant Manufacturing and YCC Parts 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 Giant Manufacturing with a short position of YCC Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and YCC Parts.
Diversification Opportunities for Giant Manufacturing and YCC Parts
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Giant and YCC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and YCC Parts MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YCC Parts MFG and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with YCC Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YCC Parts MFG has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and YCC Parts go up and down completely randomly.
Pair Corralation between Giant Manufacturing and YCC Parts
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the YCC Parts. In addition to that, Giant Manufacturing is 1.83 times more volatile than YCC Parts MFG. It trades about -0.3 of its total potential returns per unit of risk. YCC Parts MFG is currently generating about -0.06 per unit of volatility. If you would invest 5,860 in YCC Parts MFG on August 29, 2024 and sell it today you would lose (300.00) from holding YCC Parts MFG or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. YCC Parts MFG
Performance |
| Timeline |
| Giant Manufacturing |
| YCC Parts MFG |
Giant Manufacturing and YCC Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and YCC Parts
The main advantage of trading using opposite Giant Manufacturing and YCC Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, YCC Parts 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 YCC Parts will offset losses from the drop in YCC Parts' long position.| Giant Manufacturing vs. Merida Industry Co | Giant Manufacturing vs. President Chain Store | Giant Manufacturing vs. Cheng Shin Rubber | Giant Manufacturing vs. Uni President Enterprises Corp |
| YCC Parts vs. Gordon Auto Body | YCC Parts vs. Asia Plastic Recycling | YCC Parts vs. De Licacy Industrial | YCC Parts vs. Tex Ray Industrial Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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