Correlation Between Yulon Finance and China Airlines
Can any of the company-specific risk be diversified away by investing in both Yulon Finance and China Airlines 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 China Airlines 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 China Airlines, you can compare the effects of market volatilities on Yulon Finance and China Airlines 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 China Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and China Airlines.
Diversification Opportunities for Yulon Finance and China Airlines
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yulon and China is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp and China Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Airlines 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 China Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Airlines has no effect on the direction of Yulon Finance i.e., Yulon Finance and China Airlines go up and down completely randomly.
Pair Corralation between Yulon Finance and China Airlines
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the China Airlines. In addition to that, Yulon Finance is 2.36 times more volatile than China Airlines. It trades about -0.31 of its total potential returns per unit of risk. China Airlines is currently generating about 0.45 per unit of volatility. If you would invest 2,215 in China Airlines on August 25, 2024 and sell it today you would earn a total of 245.00 from holding China Airlines or generate 11.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Finance Corp vs. China Airlines
Performance |
| Timeline |
| Yulon Finance Corp |
| China Airlines |
Yulon Finance and China Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and China Airlines
The main advantage of trading using opposite Yulon Finance and China Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance position performs unexpectedly, China Airlines 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 China Airlines will offset losses from the drop in China Airlines' 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 |
| China Airlines vs. Sunny Friend Environmental | China Airlines vs. TTET Union Corp | China Airlines vs. ECOVE Environment Corp | China Airlines vs. Yulon Finance Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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