Correlation Between Yelp and YY
Can any of the company-specific risk be diversified away by investing in both Yelp and YY 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 Yelp and YY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yelp Inc and YY Inc Class, you can compare the effects of market volatilities on Yelp and YY 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 Yelp with a short position of YY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yelp and YY.
Diversification Opportunities for Yelp and YY
Good diversification
The 3 months correlation between Yelp and YY is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Yelp Inc and YY Inc Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Inc Class and Yelp 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 Yelp Inc are associated (or correlated) with YY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Inc Class has no effect on the direction of Yelp i.e., Yelp and YY go up and down completely randomly.
Pair Corralation between Yelp and YY
Given the investment horizon of 90 days Yelp Inc is expected to generate 0.79 times more return on investment than YY. However, Yelp Inc is 1.26 times less risky than YY. It trades about 0.02 of its potential returns per unit of risk. YY Inc Class is currently generating about 0.01 per unit of risk. If you would invest 3,215 in Yelp Inc on August 27, 2024 and sell it today you would earn a total of 398.00 from holding Yelp Inc or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yelp Inc vs. YY Inc Class
Performance |
| Timeline |
| Yelp Inc |
| YY Inc Class |
Yelp and YY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yelp and YY
The main advantage of trading using opposite Yelp and YY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yelp position performs unexpectedly, YY 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 YY will offset losses from the drop in YY's long position.The idea behind Yelp Inc and YY Inc Class 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.| YY vs. Weibo Corp | YY vs. DouYu International Holdings | YY vs. Tencent Music Entertainment | YY vs. Autohome |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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