Correlation Between Yageo Corp and Lin Horn

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

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

Diversification Opportunities for Yageo Corp and Lin Horn

0.39

Correlation Coefficient

Yageo Corp  Lin Horn

Weak diversification

The 3 months correlation between Yageo and Lin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Lin Horn Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lin Horn 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 Lin Horn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lin Horn Technology has no effect on the direction of Yageo Corp i.e., Yageo Corp and Lin Horn go up and down completely randomly.

Pair Corralation between Yageo Corp and Lin Horn

Assuming the 90 days trading horizon Yageo Corp is expected to under-perform the Lin Horn. But the stock apears to be less risky and, when comparing its historical volatility, Yageo Corp is 1.41 times less risky than Lin Horn. The stock trades about -0.02 of its potential returns per unit of risk. The Lin Horn Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,390  in Lin Horn Technology on October 27, 2024 and sell it today you would earn a total of  45.00  from holding Lin Horn Technology or generate 1.88% return on investment over 90 days.

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

Yageo Corp  vs.  Lin Horn Technology

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.

Lin Horn Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lin Horn Technology 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.

Pair Trading with Yageo Corp and Lin Horn

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

The idea behind Yageo Corp and Lin Horn Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.