Correlation Between YanGuFang International and Precision Drilling
Can any of the company-specific risk be diversified away by investing in both YanGuFang International and Precision Drilling 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 YanGuFang International and Precision Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YanGuFang International Group and Precision Drilling, you can compare the effects of market volatilities on YanGuFang International and Precision Drilling 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 YanGuFang International with a short position of Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of YanGuFang International and Precision Drilling.
Diversification Opportunities for YanGuFang International and Precision Drilling
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between YanGuFang and Precision is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding YanGuFang International Group and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling and YanGuFang International 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 YanGuFang International Group are associated (or correlated) with Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of YanGuFang International i.e., YanGuFang International and Precision Drilling go up and down completely randomly.
Pair Corralation between YanGuFang International and Precision Drilling
If you would invest 0.18 in YanGuFang International Group on September 12, 2024 and sell it today you would earn a total of 0.00 from holding YanGuFang International Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
YanGuFang International Group vs. Precision Drilling
Performance |
| Timeline |
| YanGuFang International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Precision Drilling |
YanGuFang International and Precision Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YanGuFang International and Precision Drilling
The main advantage of trading using opposite YanGuFang International and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YanGuFang International position performs unexpectedly, Precision Drilling 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 Precision Drilling will offset losses from the drop in Precision Drilling's long position.The idea behind YanGuFang International Group and Precision Drilling 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.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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