Correlation Between Youngy Health and Masterwork Machinery

Can any of the company-specific risk be diversified away by investing in both Youngy Health and Masterwork Machinery 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 Youngy Health and Masterwork Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Youngy Health Co and Masterwork Machinery, you can compare the effects of market volatilities on Youngy Health and Masterwork Machinery 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 Youngy Health with a short position of Masterwork Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngy Health and Masterwork Machinery.

Diversification Opportunities for Youngy Health and Masterwork Machinery

0.71

Correlation Coefficient

Youngy Health  Masterwork Machinery

Poor diversification

The 3 months correlation between Youngy and Masterwork is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Youngy Health Co and Masterwork Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masterwork Machinery and Youngy Health 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 Youngy Health Co are associated (or correlated) with Masterwork Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masterwork Machinery has no effect on the direction of Youngy Health i.e., Youngy Health and Masterwork Machinery go up and down completely randomly.

Pair Corralation between Youngy Health and Masterwork Machinery

Assuming the 90 days trading horizon Youngy Health Co is expected to generate 1.2 times more return on investment than Masterwork Machinery. However, Youngy Health is 1.2 times more volatile than Masterwork Machinery. It trades about -0.41 of its potential returns per unit of risk. Masterwork Machinery is currently generating about -0.59 per unit of risk. If you would invest  441.00  in Youngy Health Co on October 8, 2024 and sell it today you would lose (98.00) from holding Youngy Health Co or give up 22.22% of portfolio value over 90 days.

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

Youngy Health Co  vs.  Masterwork Machinery

Youngy Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Masterwork Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Masterwork Machinery 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 Youngy Health and Masterwork Machinery

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

The idea behind Youngy Health Co and Masterwork Machinery 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.