Correlation Between Yonyu Plastics and HOYA Resort

Can any of the company-specific risk be diversified away by investing in both Yonyu Plastics and HOYA Resort 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 HOYA Resort 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 HOYA Resort Hotel, you can compare the effects of market volatilities on Yonyu Plastics and HOYA Resort 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 HOYA Resort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yonyu Plastics and HOYA Resort.

Diversification Opportunities for Yonyu Plastics and HOYA Resort

-0.57

Correlation Coefficient

Yonyu Plastics  HOYA Resort

Excellent diversification

The 3 months correlation between Yonyu and HOYA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Yonyu Plastics Co and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel 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 HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of Yonyu Plastics i.e., Yonyu Plastics and HOYA Resort go up and down completely randomly.

Pair Corralation between Yonyu Plastics and HOYA Resort

Assuming the 90 days trading horizon Yonyu Plastics is expected to generate 10.77 times less return on investment than HOYA Resort. But when comparing it to its historical volatility, Yonyu Plastics Co is 2.8 times less risky than HOYA Resort. It trades about 0.03 of its potential returns per unit of risk. HOYA Resort Hotel is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,945  in HOYA Resort Hotel on October 24, 2024 and sell it today you would earn a total of  395.00  from holding HOYA Resort Hotel or generate 20.31% return on investment over 90 days.

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

Yonyu Plastics Co  vs.  HOYA Resort Hotel

Yonyu Plastics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yonyu Plastics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

HOYA Resort Hotel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Resort Hotel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, HOYA Resort showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yonyu Plastics and HOYA Resort

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

The idea behind Yonyu Plastics Co and HOYA Resort Hotel 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.