Correlation Between Yageo Corp and Promate Electronic

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

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

Diversification Opportunities for Yageo Corp and Promate Electronic

-0.48

Correlation Coefficient

Yageo Corp  Promate Electronic

Very good diversification

The 3 months correlation between Yageo and Promate is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Promate Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promate Electronic 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 Promate Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promate Electronic has no effect on the direction of Yageo Corp i.e., Yageo Corp and Promate Electronic go up and down completely randomly.

Pair Corralation between Yageo Corp and Promate Electronic

Assuming the 90 days trading horizon Yageo Corp is expected to under-perform the Promate Electronic. In addition to that, Yageo Corp is 1.31 times more volatile than Promate Electronic Co. It trades about -0.14 of its total potential returns per unit of risk. Promate Electronic Co is currently generating about -0.01 per unit of volatility. If you would invest  8,170  in Promate Electronic Co on September 17, 2024 and sell it today you would lose (90.00) from holding Promate Electronic Co or give up 1.1% of portfolio value over 90 days.

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

Yageo Corp  vs.  Promate Electronic 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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Promate Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Promate Electronic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Promate Electronic 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 Promate Electronic

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

The idea behind Yageo Corp and Promate Electronic 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.