Correlation Between Yes Optoelectronics and Shenzhen AV-Display

Can any of the company-specific risk be diversified away by investing in both Yes Optoelectronics and Shenzhen AV-Display 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 Yes Optoelectronics and Shenzhen AV-Display into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yes Optoelectronics Co and Shenzhen AV Display Co, you can compare the effects of market volatilities on Yes Optoelectronics and Shenzhen AV-Display 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 Yes Optoelectronics with a short position of Shenzhen AV-Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yes Optoelectronics and Shenzhen AV-Display.

Diversification Opportunities for Yes Optoelectronics and Shenzhen AV-Display

0.65

Correlation Coefficient

Yes Optoelectronics  Shenzhen AV-Display

Poor diversification

The 3 months correlation between Yes and Shenzhen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Yes Optoelectronics Co and Shenzhen AV Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen AV Display and Yes Optoelectronics 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 Yes Optoelectronics Co are associated (or correlated) with Shenzhen AV-Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen AV Display has no effect on the direction of Yes Optoelectronics i.e., Yes Optoelectronics and Shenzhen AV-Display go up and down completely randomly.

Pair Corralation between Yes Optoelectronics and Shenzhen AV-Display

Assuming the 90 days trading horizon Yes Optoelectronics Co is expected to under-perform the Shenzhen AV-Display. In addition to that, Yes Optoelectronics is 1.43 times more volatile than Shenzhen AV Display Co. It trades about -0.1 of its total potential returns per unit of risk. Shenzhen AV Display Co is currently generating about -0.1 per unit of volatility. If you would invest  3,638  in Shenzhen AV Display Co on December 25, 2024 and sell it today you would lose (541.00) from holding Shenzhen AV Display Co or give up 14.87% of portfolio value over 90 days.

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

Yes Optoelectronics Co  vs.  Shenzhen AV Display Co

Yes Optoelectronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yes Optoelectronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shenzhen AV Display

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen AV Display Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Yes Optoelectronics and Shenzhen AV-Display

The main advantage of trading using opposite Yes Optoelectronics and Shenzhen AV-Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yes Optoelectronics position performs unexpectedly, Shenzhen AV-Display 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 Shenzhen AV-Display will offset losses from the drop in Shenzhen AV-Display's long position.

The idea behind Yes Optoelectronics Co and Shenzhen AV Display 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.