Correlation Between Yunnan Aluminium and Do Fluoride

Can any of the company-specific risk be diversified away by investing in both Yunnan Aluminium and Do Fluoride 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 Yunnan Aluminium and Do Fluoride into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yunnan Aluminium Co and Do Fluoride Chemicals Co, you can compare the effects of market volatilities on Yunnan Aluminium and Do Fluoride 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 Yunnan Aluminium with a short position of Do Fluoride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunnan Aluminium and Do Fluoride.

Diversification Opportunities for Yunnan Aluminium and Do Fluoride

-0.43

Correlation Coefficient

Yunnan Aluminium  Do Fluoride

Very good diversification

The 3 months correlation between Yunnan and 002407 is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Aluminium Co and Do Fluoride Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Do Fluoride Chemicals and Yunnan Aluminium 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 Yunnan Aluminium Co are associated (or correlated) with Do Fluoride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Do Fluoride Chemicals has no effect on the direction of Yunnan Aluminium i.e., Yunnan Aluminium and Do Fluoride go up and down completely randomly.

Pair Corralation between Yunnan Aluminium and Do Fluoride

Assuming the 90 days trading horizon Yunnan Aluminium Co is expected to generate 0.87 times more return on investment than Do Fluoride. However, Yunnan Aluminium Co is 1.15 times less risky than Do Fluoride. It trades about 0.08 of its potential returns per unit of risk. Do Fluoride Chemicals Co is currently generating about 0.01 per unit of risk. If you would invest  1,526  in Yunnan Aluminium Co on October 24, 2024 and sell it today you would earn a total of  148.00  from holding Yunnan Aluminium Co or generate 9.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Yunnan Aluminium Co  vs.  Do Fluoride Chemicals Co

Yunnan Aluminium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Aluminium Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yunnan Aluminium may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Do Fluoride Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Do Fluoride Chemicals Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Do Fluoride is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yunnan Aluminium and Do Fluoride

The main advantage of trading using opposite Yunnan Aluminium and Do Fluoride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunnan Aluminium position performs unexpectedly, Do Fluoride 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 Do Fluoride will offset losses from the drop in Do Fluoride's long position.

The idea behind Yunnan Aluminium Co and Do Fluoride Chemicals Co 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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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.