Correlation Between Yulon Nissan and Cayman Engley

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

By analyzing existing cross correlation between Yulon Nissan Motor and Cayman Engley Industrial, you can compare the effects of market volatilities on Yulon Nissan and Cayman Engley 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 Yulon Nissan with a short position of Cayman Engley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Nissan and Cayman Engley.

Diversification Opportunities for Yulon Nissan and Cayman Engley

0.94

Correlation Coefficient

Yulon Nissan  Cayman Engley

Almost no diversification

The 3 months correlation between Yulon and Cayman is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Nissan Motor and Cayman Engley Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayman Engley Industrial and Yulon Nissan 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 Yulon Nissan Motor are associated (or correlated) with Cayman Engley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayman Engley Industrial has no effect on the direction of Yulon Nissan i.e., Yulon Nissan and Cayman Engley go up and down completely randomly.

Pair Corralation between Yulon Nissan and Cayman Engley

Assuming the 90 days trading horizon Yulon Nissan Motor is expected to under-perform the Cayman Engley. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Nissan Motor is 1.13 times less risky than Cayman Engley. The stock trades about -0.23 of its potential returns per unit of risk. The Cayman Engley Industrial is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  5,210  in Cayman Engley Industrial on September 24, 2024 and sell it today you would lose (1,665) from holding Cayman Engley Industrial or give up 31.96% of portfolio value over 90 days.

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

Yulon Nissan Motor  vs.  Cayman Engley Industrial

Yulon Nissan Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yulon Nissan Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cayman Engley Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cayman Engley Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Yulon Nissan and Cayman Engley

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

The idea behind Yulon Nissan Motor and Cayman Engley 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 Commodity Directory module to find actively traded commodities issued by global exchanges.