Correlation Between ADF and Yellow Pages
Can any of the company-specific risk be diversified away by investing in both ADF and Yellow Pages 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 ADF and Yellow Pages into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADF Group and Yellow Pages Limited, you can compare the effects of market volatilities on ADF and Yellow Pages 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 ADF with a short position of Yellow Pages. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADF and Yellow Pages.
Diversification Opportunities for ADF and Yellow Pages
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ADF and Yellow is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ADF Group and Yellow Pages Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yellow Pages Limited and ADF 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 ADF Group are associated (or correlated) with Yellow Pages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yellow Pages Limited has no effect on the direction of ADF i.e., ADF and Yellow Pages go up and down completely randomly.
Pair Corralation between ADF and Yellow Pages
Assuming the 90 days trading horizon ADF Group is expected to generate 1.91 times more return on investment than Yellow Pages. However, ADF is 1.91 times more volatile than Yellow Pages Limited. It trades about 0.13 of its potential returns per unit of risk. Yellow Pages Limited is currently generating about 0.01 per unit of risk. If you would invest 942.00 in ADF Group on September 24, 2024 and sell it today you would earn a total of 77.00 from holding ADF Group or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADF Group vs. Yellow Pages Limited
Performance |
| Timeline |
| ADF Group |
| Yellow Pages Limited |
ADF and Yellow Pages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADF and Yellow Pages
The main advantage of trading using opposite ADF and Yellow Pages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADF position performs unexpectedly, Yellow Pages 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 Yellow Pages will offset losses from the drop in Yellow Pages' long position.| ADF vs. IBC Advanced Alloys | ADF vs. Ucore Rare Metals | ADF vs. Commerce Resources Corp | ADF vs. Focus Graphite |
| Yellow Pages vs. Genesis Land Development | Yellow Pages vs. ADF Group | Yellow Pages vs. Madison Pacific Properties | Yellow Pages vs. Goodfellow |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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