Correlation Between ShenZhen YUTO and Jilin OLED

Can any of the company-specific risk be diversified away by investing in both ShenZhen YUTO and Jilin OLED 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 ShenZhen YUTO and Jilin OLED into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ShenZhen YUTO Packaging and Jilin OLED Material, you can compare the effects of market volatilities on ShenZhen YUTO and Jilin OLED 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 ShenZhen YUTO with a short position of Jilin OLED. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShenZhen YUTO and Jilin OLED.

Diversification Opportunities for ShenZhen YUTO and Jilin OLED

-0.41

Correlation Coefficient

ShenZhen YUTO  Jilin OLED

Very good diversification

The 3 months correlation between ShenZhen and Jilin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding ShenZhen YUTO Packaging and Jilin OLED Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jilin OLED Material and ShenZhen YUTO 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 ShenZhen YUTO Packaging are associated (or correlated) with Jilin OLED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jilin OLED Material has no effect on the direction of ShenZhen YUTO i.e., ShenZhen YUTO and Jilin OLED go up and down completely randomly.

Pair Corralation between ShenZhen YUTO and Jilin OLED

Assuming the 90 days trading horizon ShenZhen YUTO Packaging is expected to generate 0.41 times more return on investment than Jilin OLED. However, ShenZhen YUTO Packaging is 2.41 times less risky than Jilin OLED. It trades about -0.04 of its potential returns per unit of risk. Jilin OLED Material is currently generating about -0.03 per unit of risk. If you would invest  2,693  in ShenZhen YUTO Packaging on December 26, 2024 and sell it today you would lose (94.00) from holding ShenZhen YUTO Packaging or give up 3.49% of portfolio value over 90 days.

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

ShenZhen YUTO Packaging  vs.  Jilin OLED Material

ShenZhen YUTO Packaging

Risk-Adjusted Performance

Very Weak

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

Jilin OLED Material

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jilin OLED Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ShenZhen YUTO and Jilin OLED

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

The idea behind ShenZhen YUTO Packaging and Jilin OLED Material 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.