Correlation Between Netflix and Yong Shun
Can any of the company-specific risk be diversified away by investing in both Netflix and Yong Shun 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 Netflix and Yong Shun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Yong Shun Chemical, you can compare the effects of market volatilities on Netflix and Yong Shun 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 Netflix with a short position of Yong Shun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Yong Shun.
Diversification Opportunities for Netflix and Yong Shun
Pay attention - limited upside
The 3 months correlation between Netflix and Yong is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Yong Shun Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Shun Chemical and Netflix 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 Netflix are associated (or correlated) with Yong Shun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Shun Chemical has no effect on the direction of Netflix i.e., Netflix and Yong Shun go up and down completely randomly.
Pair Corralation between Netflix and Yong Shun
Given the investment horizon of 90 days Netflix is expected to generate 1.22 times more return on investment than Yong Shun. However, Netflix is 1.22 times more volatile than Yong Shun Chemical. It trades about 0.4 of its potential returns per unit of risk. Yong Shun Chemical is currently generating about -0.25 per unit of risk. If you would invest 80,544 in Netflix on September 12, 2024 and sell it today you would earn a total of 10,791 from holding Netflix or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Netflix vs. Yong Shun Chemical
Performance |
| Timeline |
| Netflix |
| Yong Shun Chemical |
Netflix and Yong Shun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Yong Shun
The main advantage of trading using opposite Netflix and Yong Shun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Yong Shun 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 Yong Shun will offset losses from the drop in Yong Shun's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Yong Shun vs. Tainan Spinning Co | Yong Shun vs. Lealea Enterprise Co | Yong Shun vs. China Petrochemical Development | Yong Shun vs. Ruentex Development Co |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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