Correlation Between Universal Textile and Yi Jinn

Can any of the company-specific risk be diversified away by investing in both Universal Textile and Yi Jinn 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 Universal Textile and Yi Jinn into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Textile Co and Yi Jinn Industrial, you can compare the effects of market volatilities on Universal Textile and Yi Jinn 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 Universal Textile with a short position of Yi Jinn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Textile and Yi Jinn.

Diversification Opportunities for Universal Textile and Yi Jinn

-0.27

Correlation Coefficient

Universal Textile  Yi Jinn

Very good diversification

The 3 months correlation between Universal and 1457 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Universal Textile Co and Yi Jinn Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yi Jinn Industrial and Universal Textile 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 Universal Textile Co are associated (or correlated) with Yi Jinn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yi Jinn Industrial has no effect on the direction of Universal Textile i.e., Universal Textile and Yi Jinn go up and down completely randomly.

Pair Corralation between Universal Textile and Yi Jinn

Assuming the 90 days trading horizon Universal Textile Co is expected to generate 1.73 times more return on investment than Yi Jinn. However, Universal Textile is 1.73 times more volatile than Yi Jinn Industrial. It trades about 0.01 of its potential returns per unit of risk. Yi Jinn Industrial is currently generating about 0.01 per unit of risk. If you would invest  1,600  in Universal Textile Co on October 10, 2024 and sell it today you would earn a total of  75.00  from holding Universal Textile Co or generate 4.69% return on investment over 90 days.

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

Universal Textile Co  vs.  Yi Jinn Industrial

Universal Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Textile Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Yi Jinn Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yi Jinn Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yi Jinn 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 Universal Textile and Yi Jinn

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

The idea behind Universal Textile Co and Yi Jinn Industrial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.