Correlation Between Yulon Finance and Forest Water
Can any of the company-specific risk be diversified away by investing in both Yulon Finance and Forest Water 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 Forest Water 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 Forest Water Environmental, you can compare the effects of market volatilities on Yulon Finance and Forest Water 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 Forest Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and Forest Water.
Diversification Opportunities for Yulon Finance and Forest Water
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yulon and Forest is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp and Forest Water Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forest Water Environ 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 Forest Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forest Water Environ has no effect on the direction of Yulon Finance i.e., Yulon Finance and Forest Water go up and down completely randomly.
Pair Corralation between Yulon Finance and Forest Water
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the Forest Water. In addition to that, Yulon Finance is 1.06 times more volatile than Forest Water Environmental. It trades about -0.15 of its total potential returns per unit of risk. Forest Water Environmental is currently generating about -0.12 per unit of volatility. If you would invest 4,275 in Forest Water Environmental on August 25, 2024 and sell it today you would lose (605.00) from holding Forest Water Environmental or give up 14.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Finance Corp vs. Forest Water Environmental
Performance |
| Timeline |
| Yulon Finance Corp |
| Forest Water Environ |
Yulon Finance and Forest Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and Forest Water
The main advantage of trading using opposite Yulon Finance and Forest Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance position performs unexpectedly, Forest Water 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 Forest Water will offset losses from the drop in Forest Water'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 |
| Forest Water vs. Sunny Friend Environmental | Forest Water vs. TTET Union Corp | Forest Water vs. ECOVE Environment Corp | Forest Water 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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