Correlation Between Yulon Finance and Huaku Development
Can any of the company-specific risk be diversified away by investing in both Yulon Finance and Huaku Development 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 Huaku Development 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 Huaku Development Co, you can compare the effects of market volatilities on Yulon Finance and Huaku Development 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 Huaku Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and Huaku Development.
Diversification Opportunities for Yulon Finance and Huaku Development
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yulon and Huaku is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp and Huaku Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaku Development 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 Huaku Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaku Development has no effect on the direction of Yulon Finance i.e., Yulon Finance and Huaku Development go up and down completely randomly.
Pair Corralation between Yulon Finance and Huaku Development
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the Huaku Development. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Finance Corp is 1.18 times less risky than Huaku Development. The stock trades about -0.03 of its potential returns per unit of risk. The Huaku Development Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,790 in Huaku Development Co on August 29, 2024 and sell it today you would earn a total of 3,510 from holding Huaku Development Co or generate 39.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Finance Corp vs. Huaku Development Co
Performance |
| Timeline |
| Yulon Finance Corp |
| Huaku Development |
Yulon Finance and Huaku Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and Huaku Development
The main advantage of trading using opposite Yulon Finance and Huaku Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance position performs unexpectedly, Huaku Development 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 Huaku Development will offset losses from the drop in Huaku Development's long position.| Yulon Finance vs. Chailease Holding Co | Yulon Finance vs. Taiwan Secom Co | Yulon Finance vs. TTET Union Corp | Yulon Finance vs. China Steel Chemical |
| Huaku Development vs. Chong Hong Construction | Huaku Development vs. Highwealth Construction Corp | Huaku Development vs. Fubon Financial Holding | Huaku Development vs. CTBC Financial Holding |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |