Correlation Between On Holding and Yue Yuen
Can any of the company-specific risk be diversified away by investing in both On Holding and Yue Yuen 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 On Holding and Yue Yuen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between On Holding and Yue Yuen Industrial, you can compare the effects of market volatilities on On Holding and Yue Yuen 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 On Holding with a short position of Yue Yuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of On Holding and Yue Yuen.
Diversification Opportunities for On Holding and Yue Yuen
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ONON and Yue is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding On Holding and Yue Yuen Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yue Yuen Industrial and On Holding 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 On Holding are associated (or correlated) with Yue Yuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yue Yuen Industrial has no effect on the direction of On Holding i.e., On Holding and Yue Yuen go up and down completely randomly.
Pair Corralation between On Holding and Yue Yuen
Given the investment horizon of 90 days On Holding is expected to generate 1.11 times more return on investment than Yue Yuen. However, On Holding is 1.11 times more volatile than Yue Yuen Industrial. It trades about 0.1 of its potential returns per unit of risk. Yue Yuen Industrial is currently generating about 0.06 per unit of risk. If you would invest 1,628 in On Holding on September 13, 2024 and sell it today you would earn a total of 4,186 from holding On Holding or generate 257.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
On Holding vs. Yue Yuen Industrial
Performance |
| Timeline |
| On Holding |
| Yue Yuen Industrial |
On Holding and Yue Yuen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with On Holding and Yue Yuen
The main advantage of trading using opposite On Holding and Yue Yuen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if On Holding position performs unexpectedly, Yue Yuen 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 Yuen will offset losses from the drop in Yue Yuen's long position.| On Holding vs. Crocs Inc | On Holding vs. Skechers USA | On Holding vs. Nike Inc | On Holding vs. Designer Brands |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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