Correlation Between ESUN Financial and Yulon Finance

Can any of the company-specific risk be diversified away by investing in both ESUN Financial and Yulon Finance 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 ESUN Financial and Yulon Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for ESUN Financial and Yulon Finance

0.45

Correlation Coefficient

ESUN Financial  Yulon Finance

Very weak diversification

The 3 months correlation between ESUN and Yulon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and Yulon Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Finance Corp and ESUN Financial 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 ESUN Financial Holding are associated (or correlated) with Yulon Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Finance Corp has no effect on the direction of ESUN Financial i.e., ESUN Financial and Yulon Finance go up and down completely randomly.

Pair Corralation between ESUN Financial and Yulon Finance

Assuming the 90 days trading horizon ESUN Financial Holding is expected to generate 0.29 times more return on investment than Yulon Finance. However, ESUN Financial Holding is 3.47 times less risky than Yulon Finance. It trades about -0.02 of its potential returns per unit of risk. Yulon Finance Corp is currently generating about -0.11 per unit of risk. If you would invest  2,745  in ESUN Financial Holding on October 9, 2024 and sell it today you would lose (20.00) from holding ESUN Financial Holding or give up 0.73% of portfolio value over 90 days.

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

ESUN Financial Holding  vs.  Yulon Finance Corp

ESUN Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESUN Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ESUN Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Yulon Finance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yulon Finance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 ESUN Financial and Yulon Finance

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

The idea behind ESUN Financial Holding and Yulon Finance 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.