Correlation Between Yulon Finance and Hotai
Can any of the company-specific risk be diversified away by investing in both Yulon Finance and Hotai 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 Hotai 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 Hotai Motor Co, you can compare the effects of market volatilities on Yulon Finance and Hotai 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 Hotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and Hotai.
Diversification Opportunities for Yulon Finance and Hotai
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yulon and Hotai is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp and Hotai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Motor 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 Hotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Motor has no effect on the direction of Yulon Finance i.e., Yulon Finance and Hotai go up and down completely randomly.
Pair Corralation between Yulon Finance and Hotai
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the Hotai. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Finance Corp is 1.02 times less risky than Hotai. The stock trades about -0.03 of its potential returns per unit of risk. The Hotai Motor Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 61,728 in Hotai Motor Co on August 29, 2024 and sell it today you would earn a total of 472.00 from holding Hotai Motor Co or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Yulon Finance Corp vs. Hotai Motor Co
Performance |
| Timeline |
| Yulon Finance Corp |
| Hotai Motor |
Yulon Finance and Hotai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and Hotai
The main advantage of trading using opposite Yulon Finance and Hotai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance position performs unexpectedly, Hotai 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 Hotai will offset losses from the drop in Hotai's long position.| Yulon Finance vs. Taiwan Secom Co | Yulon Finance vs. TTET Union Corp | Yulon Finance vs. China Steel Chemical | Yulon Finance vs. Taiwan Shin Kong |
| Hotai vs. Yulon Finance Corp | Hotai vs. Taiwan Secom Co | Hotai vs. Pou Chen Corp | Hotai vs. Great Wall Enterprise |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| 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 | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| 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 |