Correlation Between Yulon Nissan and Group Up
Can any of the company-specific risk be diversified away by investing in both Yulon Nissan and Group Up 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 Group Up 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 Group Up Industrial, you can compare the effects of market volatilities on Yulon Nissan and Group Up 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 Group Up. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Nissan and Group Up.
Diversification Opportunities for Yulon Nissan and Group Up
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Yulon and Group is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Nissan Motor and Group Up Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group Up 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 Group Up. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group Up Industrial has no effect on the direction of Yulon Nissan i.e., Yulon Nissan and Group Up go up and down completely randomly.
Pair Corralation between Yulon Nissan and Group Up
Assuming the 90 days trading horizon Yulon Nissan Motor is expected to under-perform the Group Up. In addition to that, Yulon Nissan is 1.2 times more volatile than Group Up Industrial. It trades about -0.49 of its total potential returns per unit of risk. Group Up Industrial is currently generating about -0.23 per unit of volatility. If you would invest 26,500 in Group Up Industrial on September 24, 2024 and sell it today you would lose (2,150) from holding Group Up Industrial or give up 8.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Yulon Nissan Motor vs. Group Up Industrial
Performance |
Timeline |
Yulon Nissan Motor |
Group Up Industrial |
Yulon Nissan and Group Up Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yulon Nissan and Group Up
The main advantage of trading using opposite Yulon Nissan and Group Up positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Nissan position performs unexpectedly, Group Up 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 Group Up will offset losses from the drop in Group Up's long position.Yulon Nissan vs. Hotai Motor Co | Yulon Nissan vs. Yulon Motor Co | Yulon Nissan vs. Cheng Shin Rubber | Yulon Nissan vs. Formosa Chemicals Fibre |
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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.
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