Correlation Between Farmhouse and YY
Can any of the company-specific risk be diversified away by investing in both Farmhouse and YY 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 Farmhouse and YY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmhouse and YY Inc Class, you can compare the effects of market volatilities on Farmhouse and YY 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 Farmhouse with a short position of YY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmhouse and YY.
Diversification Opportunities for Farmhouse and YY
Average diversification
The 3 months correlation between Farmhouse and YY is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Farmhouse and YY Inc Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Inc Class and Farmhouse 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 Farmhouse are associated (or correlated) with YY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Inc Class has no effect on the direction of Farmhouse i.e., Farmhouse and YY go up and down completely randomly.
Pair Corralation between Farmhouse and YY
Given the investment horizon of 90 days Farmhouse is expected to generate 11.3 times more return on investment than YY. However, Farmhouse is 11.3 times more volatile than YY Inc Class. It trades about 0.1 of its potential returns per unit of risk. YY Inc Class is currently generating about 0.02 per unit of risk. If you would invest 15.00 in Farmhouse on August 26, 2024 and sell it today you would earn a total of 0.00 from holding Farmhouse or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmhouse vs. YY Inc Class
Performance |
| Timeline |
| Farmhouse |
| YY Inc Class |
Farmhouse and YY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmhouse and YY
The main advantage of trading using opposite Farmhouse and YY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmhouse position performs unexpectedly, YY 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 YY will offset losses from the drop in YY's long position.| Farmhouse vs. Tencent Holdings | Farmhouse vs. Trivago NV | Farmhouse vs. YY Inc Class | Farmhouse vs. DouYu International Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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