Correlation Between Yageo Corp and Prime Electronics

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

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

Diversification Opportunities for Yageo Corp and Prime Electronics

0.68

Correlation Coefficient

Yageo Corp  Prime Electronics

Poor diversification

The 3 months correlation between Yageo and Prime is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Prime Electronics Satellitics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Electronics 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 Prime Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Electronics has no effect on the direction of Yageo Corp i.e., Yageo Corp and Prime Electronics go up and down completely randomly.

Pair Corralation between Yageo Corp and Prime Electronics

Assuming the 90 days trading horizon Yageo Corp is expected to generate 4.92 times less return on investment than Prime Electronics. But when comparing it to its historical volatility, Yageo Corp is 1.37 times less risky than Prime Electronics. It trades about 0.01 of its potential returns per unit of risk. Prime Electronics Satellitics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,015  in Prime Electronics Satellitics on October 24, 2024 and sell it today you would earn a total of  180.00  from holding Prime Electronics Satellitics or generate 17.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Yageo Corp  vs.  Prime Electronics Satellitics

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.

Prime Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Electronics Satellitics 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 Prime Electronics

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

The idea behind Yageo Corp and Prime Electronics Satellitics 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..