Correlation Between E Lead and Yusin Holding

Can any of the company-specific risk be diversified away by investing in both E Lead and Yusin Holding 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 E Lead and Yusin Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E Lead Electronic Co and Yusin Holding Corp, you can compare the effects of market volatilities on E Lead and Yusin Holding 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 E Lead with a short position of Yusin Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Lead and Yusin Holding.

Diversification Opportunities for E Lead and Yusin Holding

0.74

Correlation Coefficient

E Lead  Yusin Holding

Poor diversification

The 3 months correlation between 2497 and Yusin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding E Lead Electronic Co and Yusin Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yusin Holding Corp and E Lead 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 E Lead Electronic Co are associated (or correlated) with Yusin Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yusin Holding Corp has no effect on the direction of E Lead i.e., E Lead and Yusin Holding go up and down completely randomly.

Pair Corralation between E Lead and Yusin Holding

Assuming the 90 days trading horizon E Lead Electronic Co is expected to under-perform the Yusin Holding. But the stock apears to be less risky and, when comparing its historical volatility, E Lead Electronic Co is 1.01 times less risky than Yusin Holding. The stock trades about -0.08 of its potential returns per unit of risk. The Yusin Holding Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  12,350  in Yusin Holding Corp on December 29, 2024 and sell it today you would lose (850.00) from holding Yusin Holding Corp or give up 6.88% of portfolio value over 90 days.

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

E Lead Electronic Co  vs.  Yusin Holding Corp

E Lead Electronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days E Lead Electronic Co 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.

Yusin Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yusin Holding 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.

Pair Trading with E Lead and Yusin Holding

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

The idea behind E Lead Electronic Co and Yusin Holding Corp 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.