Correlation Between Yageo Corp and General Interface

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

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

Diversification Opportunities for Yageo Corp and General Interface

0.77

Correlation Coefficient

Yageo Corp  General Interface

Poor diversification

The 3 months correlation between Yageo and General is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and General Interface Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Interface 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 General Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Interface has no effect on the direction of Yageo Corp i.e., Yageo Corp and General Interface go up and down completely randomly.

Pair Corralation between Yageo Corp and General Interface

Assuming the 90 days trading horizon Yageo Corp is expected to generate 1.1 times more return on investment than General Interface. However, Yageo Corp is 1.1 times more volatile than General Interface Solution. It trades about -0.09 of its potential returns per unit of risk. General Interface Solution is currently generating about -0.1 per unit of risk. If you would invest  77,000  in Yageo Corp on October 10, 2024 and sell it today you would lose (20,700) from holding Yageo Corp or give up 26.88% of portfolio value over 90 days.

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

Yageo Corp  vs.  General Interface Solution

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 fairly stable basic indicators, Yageo Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

General Interface

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Yageo Corp and General Interface Solution 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.