Correlation Between YLZ Information and Eyebright Medical

Can any of the company-specific risk be diversified away by investing in both YLZ Information and Eyebright Medical 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 YLZ Information and Eyebright Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YLZ Information Tech and Eyebright Medical Technology, you can compare the effects of market volatilities on YLZ Information and Eyebright Medical 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 YLZ Information with a short position of Eyebright Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of YLZ Information and Eyebright Medical.

Diversification Opportunities for YLZ Information and Eyebright Medical

0.7

Correlation Coefficient

YLZ Information  Eyebright Medical

Poor diversification

The 3 months correlation between YLZ and Eyebright is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding YLZ Information Tech and Eyebright Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eyebright Medical and YLZ Information 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 YLZ Information Tech are associated (or correlated) with Eyebright Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eyebright Medical has no effect on the direction of YLZ Information i.e., YLZ Information and Eyebright Medical go up and down completely randomly.

Pair Corralation between YLZ Information and Eyebright Medical

Assuming the 90 days trading horizon YLZ Information Tech is expected to generate 1.02 times more return on investment than Eyebright Medical. However, YLZ Information is 1.02 times more volatile than Eyebright Medical Technology. It trades about 0.0 of its potential returns per unit of risk. Eyebright Medical Technology is currently generating about -0.03 per unit of risk. If you would invest  336.00  in YLZ Information Tech on September 28, 2024 and sell it today you would lose (12.00) from holding YLZ Information Tech or give up 3.57% of portfolio value over 90 days.

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

YLZ Information Tech  vs.  Eyebright Medical Technology

YLZ Information Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YLZ Information Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, YLZ Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eyebright Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eyebright Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with YLZ Information and Eyebright Medical

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

The idea behind YLZ Information Tech and Eyebright Medical Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.