Correlation Between Yageo Corp and Edimax Technology

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

By analyzing existing cross correlation between Yageo Corp and Edimax Technology Co, you can compare the effects of market volatilities on Yageo Corp and Edimax Technology 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 Yageo Corp with a short position of Edimax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yageo Corp and Edimax Technology.

Diversification Opportunities for Yageo Corp and Edimax Technology

0.57

Correlation Coefficient

Yageo Corp  Edimax Technology

Very weak diversification

The 3 months correlation between Yageo and Edimax is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Edimax Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edimax Technology and Yageo Corp 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 Yageo Corp are associated (or correlated) with Edimax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edimax Technology has no effect on the direction of Yageo Corp i.e., Yageo Corp and Edimax Technology go up and down completely randomly.

Pair Corralation between Yageo Corp and Edimax Technology

Assuming the 90 days trading horizon Yageo Corp is expected to generate 5.42 times less return on investment than Edimax Technology. But when comparing it to its historical volatility, Yageo Corp is 1.55 times less risky than Edimax Technology. It trades about 0.02 of its potential returns per unit of risk. Edimax Technology Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,580  in Edimax Technology Co on October 9, 2024 and sell it today you would earn a total of  1,400  from holding Edimax Technology Co or generate 88.61% return on investment over 90 days.

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

Yageo Corp  vs.  Edimax Technology Co

Yageo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yageo Corp 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.

Edimax Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edimax Technology Co 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Yageo Corp and Edimax Technology

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

The idea behind Yageo Corp and Edimax Technology Co 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..