Correlation Between Yulon Finance and Yem Chio
Can any of the company-specific risk be diversified away by investing in both Yulon Finance and Yem Chio 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 Yem Chio 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 Yem Chio Co, you can compare the effects of market volatilities on Yulon Finance and Yem Chio 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 Yem Chio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and Yem Chio.
Diversification Opportunities for Yulon Finance and Yem Chio
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yulon and Yem is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp and Yem Chio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yem Chio 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 Yem Chio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yem Chio has no effect on the direction of Yulon Finance i.e., Yulon Finance and Yem Chio go up and down completely randomly.
Pair Corralation between Yulon Finance and Yem Chio
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the Yem Chio. In addition to that, Yulon Finance is 1.93 times more volatile than Yem Chio Co. It trades about -0.29 of its total potential returns per unit of risk. Yem Chio Co is currently generating about -0.13 per unit of volatility. If you would invest 1,925 in Yem Chio Co on August 29, 2024 and sell it today you would lose (105.00) from holding Yem Chio Co or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Finance Corp vs. Yem Chio Co
Performance |
| Timeline |
| Yulon Finance Corp |
| Yem Chio |
Yulon Finance and Yem Chio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and Yem Chio
The main advantage of trading using opposite Yulon Finance and Yem Chio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance position performs unexpectedly, Yem Chio 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 Yem Chio will offset losses from the drop in Yem Chio'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 |
| Yem Chio vs. USI Corp | Yem Chio vs. Asia Polymer Corp | Yem Chio vs. Sincere Navigation Corp | Yem Chio vs. Lealea Enterprise 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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