Correlation Between Soyea Technology and Youyou Foods

Can any of the company-specific risk be diversified away by investing in both Soyea Technology and Youyou Foods 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 Soyea Technology and Youyou Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Soyea Technology Co and Youyou Foods Co, you can compare the effects of market volatilities on Soyea Technology and Youyou Foods 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 Soyea Technology with a short position of Youyou Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soyea Technology and Youyou Foods.

Diversification Opportunities for Soyea Technology and Youyou Foods

0.93

Correlation Coefficient

Soyea Technology  Youyou Foods

Almost no diversification

The 3 months correlation between Soyea and Youyou is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Soyea Technology Co and Youyou Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youyou Foods and Soyea Technology 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 Soyea Technology Co are associated (or correlated) with Youyou Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youyou Foods has no effect on the direction of Soyea Technology i.e., Soyea Technology and Youyou Foods go up and down completely randomly.

Pair Corralation between Soyea Technology and Youyou Foods

Assuming the 90 days trading horizon Soyea Technology Co is expected to generate 0.84 times more return on investment than Youyou Foods. However, Soyea Technology Co is 1.18 times less risky than Youyou Foods. It trades about 0.24 of its potential returns per unit of risk. Youyou Foods Co is currently generating about -0.04 per unit of risk. If you would invest  532.00  in Soyea Technology Co on September 21, 2024 and sell it today you would earn a total of  79.00  from holding Soyea Technology Co or generate 14.85% return on investment over 90 days.

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

Soyea Technology Co  vs.  Youyou Foods Co

Soyea Technology

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Soyea Technology Co are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Soyea Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Youyou Foods

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Youyou Foods Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Youyou Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soyea Technology and Youyou Foods

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

The idea behind Soyea Technology Co and Youyou Foods 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.