Correlation Between YD More and Libra Insurance

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Can any of the company-specific risk be diversified away by investing in both YD More and Libra Insurance 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 YD More and Libra Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YD More Investments and Libra Insurance, you can compare the effects of market volatilities on YD More and Libra Insurance 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 YD More with a short position of Libra Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of YD More and Libra Insurance.

Diversification Opportunities for YD More and Libra Insurance

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between MRIN and Libra is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding YD More Investments and Libra Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libra Insurance and YD More 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 YD More Investments are associated (or correlated) with Libra Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libra Insurance has no effect on the direction of YD More i.e., YD More and Libra Insurance go up and down completely randomly.

Pair Corralation between YD More and Libra Insurance

Assuming the 90 days trading horizon YD More Investments is expected to generate 0.8 times more return on investment than Libra Insurance. However, YD More Investments is 1.24 times less risky than Libra Insurance. It trades about 0.26 of its potential returns per unit of risk. Libra Insurance is currently generating about 0.06 per unit of risk. If you would invest  145,400  in YD More Investments on December 11, 2024 and sell it today you would earn a total of  29,000  from holding YD More Investments or generate 19.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

YD More Investments  vs.  Libra Insurance

 Performance 
       Timeline  
YD More Investments 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in YD More Investments are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YD More sustained solid returns over the last few months and may actually be approaching a breakup point.
Libra Insurance 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Libra Insurance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Libra Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

YD More and Libra Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with YD More and Libra Insurance

The main advantage of trading using opposite YD More and Libra Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YD More position performs unexpectedly, Libra Insurance 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 Libra Insurance will offset losses from the drop in Libra Insurance's long position.
The idea behind YD More Investments and Libra Insurance 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.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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