Correlation Between Yonyu Plastics and Prince Housing

Can any of the company-specific risk be diversified away by investing in both Yonyu Plastics and Prince Housing 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 Yonyu Plastics and Prince Housing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yonyu Plastics Co and Prince Housing Development, you can compare the effects of market volatilities on Yonyu Plastics and Prince Housing 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 Yonyu Plastics with a short position of Prince Housing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yonyu Plastics and Prince Housing.

Diversification Opportunities for Yonyu Plastics and Prince Housing

0.65

Correlation Coefficient

Yonyu Plastics  Prince Housing

Poor diversification

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

Pair Corralation between Yonyu Plastics and Prince Housing

Assuming the 90 days trading horizon Yonyu Plastics Co is expected to generate 0.48 times more return on investment than Prince Housing. However, Yonyu Plastics Co is 2.07 times less risky than Prince Housing. It trades about -0.36 of its potential returns per unit of risk. Prince Housing Development is currently generating about -0.33 per unit of risk. If you would invest  2,535  in Yonyu Plastics Co on October 11, 2024 and sell it today you would lose (95.00) from holding Yonyu Plastics Co or give up 3.75% of portfolio value over 90 days.

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

Yonyu Plastics Co  vs.  Prince Housing Development

Yonyu Plastics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yonyu Plastics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yonyu Plastics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Prince Housing Devel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prince Housing Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Prince Housing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Yonyu Plastics and Prince Housing

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

The idea behind Yonyu Plastics Co and Prince Housing Development 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.