Correlation Between Methode Electronics and YAOKO
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and YAOKO 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 Methode Electronics and YAOKO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and YAOKO LTD, you can compare the effects of market volatilities on Methode Electronics and YAOKO 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 Methode Electronics with a short position of YAOKO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and YAOKO.
Diversification Opportunities for Methode Electronics and YAOKO
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Methode and YAOKO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and YAOKO LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAOKO LTD and Methode Electronics 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 Methode Electronics are associated (or correlated) with YAOKO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAOKO LTD has no effect on the direction of Methode Electronics i.e., Methode Electronics and YAOKO go up and down completely randomly.
Pair Corralation between Methode Electronics and YAOKO
Assuming the 90 days trading horizon Methode Electronics is expected to generate 2.88 times more return on investment than YAOKO. However, Methode Electronics is 2.88 times more volatile than YAOKO LTD. It trades about 0.23 of its potential returns per unit of risk. YAOKO LTD is currently generating about 0.12 per unit of risk. If you would invest 855.00 in Methode Electronics on August 31, 2024 and sell it today you would earn a total of 175.00 from holding Methode Electronics or generate 20.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. YAOKO LTD
Performance |
| Timeline |
| Methode Electronics |
| YAOKO LTD |
Methode Electronics and YAOKO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and YAOKO
The main advantage of trading using opposite Methode Electronics and YAOKO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, YAOKO 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 YAOKO will offset losses from the drop in YAOKO's long position.| Methode Electronics vs. Hochschild Mining plc | Methode Electronics vs. OURGAME INTHOLDL 00005 | Methode Electronics vs. MagnaChip Semiconductor Corp | Methode Electronics vs. CI GAMES SA |
| YAOKO vs. Perdoceo Education | YAOKO vs. LPKF Laser Electronics | YAOKO vs. Jupiter Fund Management | YAOKO vs. Methode Electronics |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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