Correlation Between YX Precious and ECM Libra

Can any of the company-specific risk be diversified away by investing in both YX Precious and ECM Libra 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 YX Precious and ECM Libra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YX Precious Metals and ECM Libra Financial, you can compare the effects of market volatilities on YX Precious and ECM Libra 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 YX Precious with a short position of ECM Libra. Check out your portfolio center. Please also check ongoing floating volatility patterns of YX Precious and ECM Libra.

Diversification Opportunities for YX Precious and ECM Libra

0.41

Correlation Coefficient

YX Precious  ECM Libra

Very weak diversification

The 3 months correlation between 0250 and ECM is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding YX Precious Metals and ECM Libra Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECM Libra Financial and YX Precious 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 YX Precious Metals are associated (or correlated) with ECM Libra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECM Libra Financial has no effect on the direction of YX Precious i.e., YX Precious and ECM Libra go up and down completely randomly.

Pair Corralation between YX Precious and ECM Libra

Assuming the 90 days trading horizon YX Precious is expected to generate 5.09 times less return on investment than ECM Libra. But when comparing it to its historical volatility, YX Precious Metals is 1.73 times less risky than ECM Libra. It trades about 0.01 of its potential returns per unit of risk. ECM Libra Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  19.00  in ECM Libra Financial on October 22, 2024 and sell it today you would lose (1.00) from holding ECM Libra Financial or give up 5.26% of portfolio value over 90 days.

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

YX Precious Metals  vs.  ECM Libra Financial

YX Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YX Precious Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

ECM Libra Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECM Libra Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ECM Libra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with YX Precious and ECM Libra

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

The idea behind YX Precious Metals and ECM Libra Financial 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 Anywhere module to track or share privately all of your investments from the convenience of any device.