Correlation Between Aba Chemicals and YLZ Information

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

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

Diversification Opportunities for Aba Chemicals and YLZ Information

0.48

Correlation Coefficient

Aba Chemicals  YLZ Information

Very weak diversification

The 3 months correlation between Aba and YLZ is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aba Chemicals Corp and YLZ Information Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YLZ Information Tech and Aba Chemicals 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 Aba Chemicals Corp are associated (or correlated) with YLZ Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YLZ Information Tech has no effect on the direction of Aba Chemicals i.e., Aba Chemicals and YLZ Information go up and down completely randomly.

Pair Corralation between Aba Chemicals and YLZ Information

Assuming the 90 days trading horizon Aba Chemicals is expected to generate 110.11 times less return on investment than YLZ Information. In addition to that, Aba Chemicals is 1.07 times more volatile than YLZ Information Tech. It trades about 0.0 of its total potential returns per unit of risk. YLZ Information Tech is currently generating about 0.19 per unit of volatility. If you would invest  314.00  in YLZ Information Tech on December 30, 2024 and sell it today you would earn a total of  96.00  from holding YLZ Information Tech or generate 30.57% return on investment over 90 days.

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

Aba Chemicals Corp  vs.  YLZ Information Tech

Aba Chemicals Corp

Risk-Adjusted Performance

Very Weak

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

YLZ Information Tech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YLZ Information Tech are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YLZ Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aba Chemicals and YLZ Information

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

The idea behind Aba Chemicals Corp and YLZ Information Tech 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.