Correlation Between Yulon Finance and Falcon Power
Can any of the company-specific risk be diversified away by investing in both Yulon Finance and Falcon Power 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 Yulon Finance and Falcon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Finance Corp and Falcon Power Co, you can compare the effects of market volatilities on Yulon Finance and Falcon Power 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 Yulon Finance with a short position of Falcon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and Falcon Power.
Diversification Opportunities for Yulon Finance and Falcon Power
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yulon and Falcon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp and Falcon Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Power and Yulon Finance 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 Yulon Finance Corp are associated (or correlated) with Falcon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Power has no effect on the direction of Yulon Finance i.e., Yulon Finance and Falcon Power go up and down completely randomly.
Pair Corralation between Yulon Finance and Falcon Power
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the Falcon Power. In addition to that, Yulon Finance is 1.49 times more volatile than Falcon Power Co. It trades about -0.3 of its total potential returns per unit of risk. Falcon Power Co is currently generating about -0.26 per unit of volatility. If you would invest 1,970 in Falcon Power Co on September 1, 2024 and sell it today you would lose (190.00) from holding Falcon Power Co or give up 9.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Finance Corp vs. Falcon Power Co
Performance |
| Timeline |
| Yulon Finance Corp |
| Falcon Power |
Yulon Finance and Falcon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and Falcon Power
The main advantage of trading using opposite Yulon Finance and Falcon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance position performs unexpectedly, Falcon Power 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 Falcon Power will offset losses from the drop in Falcon Power's long position.| Yulon Finance vs. Central Reinsurance Corp | Yulon Finance vs. Huaku Development Co | Yulon Finance vs. Fubon Financial Holding | Yulon Finance vs. CTBC Financial Holding |
| Falcon Power vs. Lee Chi Enterprises | Falcon Power vs. Fortune Electric Co | Falcon Power vs. Kaulin Mfg | Falcon Power vs. Klingon Aerospace |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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