Correlation Between Yellow Pages and ADF
Can any of the company-specific risk be diversified away by investing in both Yellow Pages and ADF 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 Yellow Pages and ADF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yellow Pages Limited and ADF Group, you can compare the effects of market volatilities on Yellow Pages and ADF 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 Yellow Pages with a short position of ADF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Pages and ADF.
Diversification Opportunities for Yellow Pages and ADF
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yellow and ADF is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and ADF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Group and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with ADF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Group has no effect on the direction of Yellow Pages i.e., Yellow Pages and ADF go up and down completely randomly.
Pair Corralation between Yellow Pages and ADF
Given the investment horizon of 90 days Yellow Pages is expected to generate 472.0 times less return on investment than ADF. But when comparing it to its historical volatility, Yellow Pages Limited is 1.91 times less risky than ADF. It trades about 0.0 of its potential returns per unit of risk. ADF Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 942.00 in ADF Group on September 24, 2024 and sell it today you would earn a total of 77.00 from holding ADF Group or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yellow Pages Limited vs. ADF Group
Performance |
| Timeline |
| Yellow Pages Limited |
| ADF Group |
Yellow Pages and ADF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yellow Pages and ADF
The main advantage of trading using opposite Yellow Pages and ADF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yellow Pages position performs unexpectedly, ADF 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 ADF will offset losses from the drop in ADF's long position.| Yellow Pages vs. Stingray Group | Yellow Pages vs. Richelieu Hardware | Yellow Pages vs. Aimia Inc | Yellow Pages vs. TECSYS Inc |
| ADF vs. IBC Advanced Alloys | ADF vs. Ucore Rare Metals | ADF vs. Commerce Resources Corp | ADF vs. Focus Graphite |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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