Correlation Between S Tech and Yong Shun

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

By analyzing existing cross correlation between S Tech Corp and Yong Shun Chemical, you can compare the effects of market volatilities on S Tech and Yong Shun 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 S Tech with a short position of Yong Shun. Check out your portfolio center. Please also check ongoing floating volatility patterns of S Tech and Yong Shun.

Diversification Opportunities for S Tech and Yong Shun

0.58

Correlation Coefficient

S Tech  Yong Shun

Very weak diversification

The 3 months correlation between 1584 and Yong is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding S Tech Corp and Yong Shun Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Shun Chemical and S Tech 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 S Tech Corp are associated (or correlated) with Yong Shun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Shun Chemical has no effect on the direction of S Tech i.e., S Tech and Yong Shun go up and down completely randomly.

Pair Corralation between S Tech and Yong Shun

Assuming the 90 days trading horizon S Tech Corp is expected to generate 2.83 times more return on investment than Yong Shun. However, S Tech is 2.83 times more volatile than Yong Shun Chemical. It trades about 0.04 of its potential returns per unit of risk. Yong Shun Chemical is currently generating about 0.07 per unit of risk. If you would invest  2,760  in S Tech Corp on December 21, 2024 and sell it today you would earn a total of  120.00  from holding S Tech Corp or generate 4.35% return on investment over 90 days.

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

S Tech Corp  vs.  Yong Shun Chemical

S Tech Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in S Tech Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, S Tech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Yong Shun Chemical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yong Shun Chemical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Yong Shun 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 S Tech and Yong Shun

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

The idea behind S Tech Corp and Yong Shun Chemical 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.