Correlation Between GOODYEAR T and Yue Da
Can any of the company-specific risk be diversified away by investing in both GOODYEAR T 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 GOODYEAR T and Yue Da into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODYEAR T RUBBER and Yue Da International, you can compare the effects of market volatilities on GOODYEAR T 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 GOODYEAR T with a short position of Yue Da. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and Yue Da.
Diversification Opportunities for GOODYEAR T and Yue Da
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between GOODYEAR and Yue is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER 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 GOODYEAR T 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 GOODYEAR T RUBBER 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 GOODYEAR T i.e., GOODYEAR T and Yue Da go up and down completely randomly.
Pair Corralation between GOODYEAR T and Yue Da
Assuming the 90 days trading horizon GOODYEAR T is expected to generate 217.64 times less return on investment than Yue Da. But when comparing it to its historical volatility, GOODYEAR T RUBBER is 20.73 times less risky than Yue Da. It trades about 0.01 of its potential returns per unit of risk. Yue Da International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.14 in Yue Da International on September 3, 2024 and sell it today you would earn a total of 1.36 from holding Yue Da International or generate 971.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOODYEAR T RUBBER vs. Yue Da International
Performance |
| Timeline |
| GOODYEAR T RUBBER |
| Yue Da International |
GOODYEAR T and Yue Da Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODYEAR T and Yue Da
The main advantage of trading using opposite GOODYEAR T and Yue Da positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T 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.| GOODYEAR T vs. TOTAL GABON | GOODYEAR T vs. Walgreens Boots Alliance | GOODYEAR T vs. Peak Resources Limited |
| Yue Da vs. Cardinal Health | Yue Da vs. CPU SOFTWAREHOUSE | Yue Da vs. UPDATE SOFTWARE | Yue Da vs. Alfa Financial Software |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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