Correlation Between Yingde Greatchem and ButOne Information

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

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

Diversification Opportunities for Yingde Greatchem and ButOne Information

0.88

Correlation Coefficient

Yingde Greatchem  ButOne Information

Very poor diversification

The 3 months correlation between Yingde and ButOne is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Yingde Greatchem Chemicals and ButOne Information Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ButOne Information Corp and Yingde Greatchem 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 Yingde Greatchem Chemicals are associated (or correlated) with ButOne Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ButOne Information Corp has no effect on the direction of Yingde Greatchem i.e., Yingde Greatchem and ButOne Information go up and down completely randomly.

Pair Corralation between Yingde Greatchem and ButOne Information

Assuming the 90 days trading horizon Yingde Greatchem Chemicals is expected to under-perform the ButOne Information. But the stock apears to be less risky and, when comparing its historical volatility, Yingde Greatchem Chemicals is 1.59 times less risky than ButOne Information. The stock trades about -0.03 of its potential returns per unit of risk. The ButOne Information Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,370  in ButOne Information Corp on December 4, 2024 and sell it today you would lose (130.00) from holding ButOne Information Corp or give up 5.49% of portfolio value over 90 days.

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

Yingde Greatchem Chemicals  vs.  ButOne Information Corp

Yingde Greatchem Che

Risk-Adjusted Performance

Very Weak

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

ButOne Information Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Yingde Greatchem and ButOne Information

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

The idea behind Yingde Greatchem Chemicals and ButOne Information 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.

Check out your portfolio center.

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 Managers module to screen money managers from public funds and ETFs managed around the world.