Correlation Between Yulon Finance and Hotai Finance
Can any of the company-specific risk be diversified away by investing in both Yulon Finance and Hotai Finance 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 Finance 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 Finance Corp, you can compare the effects of market volatilities on Yulon Finance and Hotai Finance 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 Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and Hotai Finance.
Diversification Opportunities for Yulon Finance and Hotai Finance
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yulon and Hotai is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp and Hotai Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Finance Corp 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 Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Finance Corp has no effect on the direction of Yulon Finance i.e., Yulon Finance and Hotai Finance go up and down completely randomly.
Pair Corralation between Yulon Finance and Hotai Finance
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the Hotai Finance. In addition to that, Yulon Finance is 2.21 times more volatile than Hotai Finance Corp. It trades about -0.3 of its total potential returns per unit of risk. Hotai Finance Corp is currently generating about -0.38 per unit of volatility. If you would invest 9,250 in Hotai Finance Corp on August 24, 2024 and sell it today you would lose (840.00) from holding Hotai Finance Corp or give up 9.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Finance Corp vs. Hotai Finance Corp
Performance |
| Timeline |
| Yulon Finance Corp |
| Hotai Finance Corp |
Yulon Finance and Hotai Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and Hotai Finance
The main advantage of trading using opposite Yulon Finance and Hotai Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance position performs unexpectedly, Hotai Finance 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 Finance will offset losses from the drop in Hotai Finance'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 |
| Hotai Finance vs. Chailease Holding Co | Hotai Finance vs. Yulon Finance Corp | Hotai Finance vs. Pou Chen Corp | Hotai Finance vs. Ruentex Industries |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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