Correlation Between Yi Jinn and Hong Yi

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

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

Diversification Opportunities for Yi Jinn and Hong Yi

0.22

Correlation Coefficient

Yi Jinn  Hong Yi

Modest diversification

The 3 months correlation between 1457 and Hong is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Yi Jinn Industrial and Hong Yi Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Yi Fiber and Yi Jinn 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 Yi Jinn Industrial are associated (or correlated) with Hong Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Yi Fiber has no effect on the direction of Yi Jinn i.e., Yi Jinn and Hong Yi go up and down completely randomly.

Pair Corralation between Yi Jinn and Hong Yi

Assuming the 90 days trading horizon Yi Jinn Industrial is expected to generate 0.86 times more return on investment than Hong Yi. However, Yi Jinn Industrial is 1.17 times less risky than Hong Yi. It trades about -0.04 of its potential returns per unit of risk. Hong Yi Fiber is currently generating about -0.13 per unit of risk. If you would invest  2,020  in Yi Jinn Industrial on September 17, 2024 and sell it today you would lose (35.00) from holding Yi Jinn Industrial or give up 1.73% of portfolio value over 90 days.

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

Yi Jinn Industrial  vs.  Hong Yi Fiber

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.

Hong Yi Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Yi Jinn Industrial and Hong Yi Fiber 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 CEOs Directory module to screen CEOs from public companies around the world.