Correlation Between EBRO FOODS and Yue Da
Can any of the company-specific risk be diversified away by investing in both EBRO FOODS and Yue Da 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 EBRO FOODS and Yue Da into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBRO FOODS and Yue Da International, you can compare the effects of market volatilities on EBRO FOODS and Yue Da 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 EBRO FOODS with a short position of Yue Da. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBRO FOODS and Yue Da.
Diversification Opportunities for EBRO FOODS and Yue Da
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EBRO and Yue is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS and Yue Da International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yue Da International and EBRO FOODS 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 EBRO FOODS are associated (or correlated) with Yue Da. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yue Da International has no effect on the direction of EBRO FOODS i.e., EBRO FOODS and Yue Da go up and down completely randomly.
Pair Corralation between EBRO FOODS and Yue Da
Assuming the 90 days trading horizon EBRO FOODS is expected to under-perform the Yue Da. But the stock apears to be less risky and, when comparing its historical volatility, EBRO FOODS is 7.05 times less risky than Yue Da. The stock trades about -0.03 of its potential returns per unit of risk. The Yue Da International is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1.35 in Yue Da International on September 12, 2024 and sell it today you would earn a total of 0.20 from holding Yue Da International or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EBRO FOODS vs. Yue Da International
Performance |
| Timeline |
| EBRO FOODS |
| Yue Da International |
EBRO FOODS and Yue Da Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBRO FOODS and Yue Da
The main advantage of trading using opposite EBRO FOODS and Yue Da positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS position performs unexpectedly, Yue Da 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 Yue Da will offset losses from the drop in Yue Da's long position.The idea behind EBRO FOODS and Yue Da International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Yue Da vs. BANKINTER ADR 2007 | Yue Da vs. The Yokohama Rubber | Yue Da vs. MBANK | Yue Da vs. PT Bank Maybank |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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