Correlation Between Integrated Electronic and Yunnan Xiyi

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

By analyzing existing cross correlation between Integrated Electronic Systems and Yunnan Xiyi Industrial, you can compare the effects of market volatilities on Integrated Electronic and Yunnan Xiyi 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 Integrated Electronic with a short position of Yunnan Xiyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Electronic and Yunnan Xiyi.

Diversification Opportunities for Integrated Electronic and Yunnan Xiyi

-0.63

Correlation Coefficient

Integrated Electronic  Yunnan Xiyi

Excellent diversification

The 3 months correlation between Integrated and Yunnan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Electronic Systems and Yunnan Xiyi Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Xiyi Industrial and Integrated Electronic 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 Integrated Electronic Systems are associated (or correlated) with Yunnan Xiyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Xiyi Industrial has no effect on the direction of Integrated Electronic i.e., Integrated Electronic and Yunnan Xiyi go up and down completely randomly.

Pair Corralation between Integrated Electronic and Yunnan Xiyi

Assuming the 90 days trading horizon Integrated Electronic is expected to generate 2.2 times less return on investment than Yunnan Xiyi. But when comparing it to its historical volatility, Integrated Electronic Systems is 2.37 times less risky than Yunnan Xiyi. It trades about 0.01 of its potential returns per unit of risk. Yunnan Xiyi Industrial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,350  in Yunnan Xiyi Industrial on December 27, 2024 and sell it today you would lose (122.00) from holding Yunnan Xiyi Industrial or give up 5.19% of portfolio value over 90 days.

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

Integrated Electronic Systems  vs.  Yunnan Xiyi Industrial

Integrated Electronic

Risk-Adjusted Performance

Very Weak

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

Yunnan Xiyi Industrial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Integrated Electronic and Yunnan Xiyi

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

The idea behind Integrated Electronic Systems and Yunnan Xiyi Industrial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.