Correlation Between Yageo Corp and Wha Yu

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

By analyzing existing cross correlation between Yageo Corp and Wha Yu Industrial, you can compare the effects of market volatilities on Yageo Corp and Wha Yu 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 Wha Yu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yageo Corp and Wha Yu.

Diversification Opportunities for Yageo Corp and Wha Yu

-0.18

Correlation Coefficient

Yageo Corp  Wha Yu

Good diversification

The 3 months correlation between Yageo and Wha is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Wha Yu Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wha Yu Industrial 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 Wha Yu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wha Yu Industrial has no effect on the direction of Yageo Corp i.e., Yageo Corp and Wha Yu go up and down completely randomly.

Pair Corralation between Yageo Corp and Wha Yu

Assuming the 90 days trading horizon Yageo Corp is expected to under-perform the Wha Yu. But the stock apears to be less risky and, when comparing its historical volatility, Yageo Corp is 1.47 times less risky than Wha Yu. The stock trades about -0.12 of its potential returns per unit of risk. The Wha Yu Industrial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,740  in Wha Yu Industrial on October 23, 2024 and sell it today you would lose (5.00) from holding Wha Yu Industrial or give up 0.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Yageo Corp  vs.  Wha Yu Industrial

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 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.

Wha Yu Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wha Yu Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wha Yu 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 Yageo Corp and Wha Yu

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

The idea behind Yageo Corp and Wha Yu 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.