Correlation Between YiDong Electronics and Yantai North

Can any of the company-specific risk be diversified away by investing in both YiDong Electronics and Yantai North 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 YiDong Electronics and Yantai North into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YiDong Electronics Technology and Yantai North Andre, you can compare the effects of market volatilities on YiDong Electronics and Yantai North 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 YiDong Electronics with a short position of Yantai North. Check out your portfolio center. Please also check ongoing floating volatility patterns of YiDong Electronics and Yantai North.

Diversification Opportunities for YiDong Electronics and Yantai North

0.55

Correlation Coefficient

YiDong Electronics  Yantai North

Very weak diversification

The 3 months correlation between YiDong and Yantai is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding YiDong Electronics Technology and Yantai North Andre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yantai North Andre and YiDong Electronics 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 YiDong Electronics Technology are associated (or correlated) with Yantai North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yantai North Andre has no effect on the direction of YiDong Electronics i.e., YiDong Electronics and Yantai North go up and down completely randomly.

Pair Corralation between YiDong Electronics and Yantai North

Assuming the 90 days trading horizon YiDong Electronics is expected to generate 1.01 times less return on investment than Yantai North. In addition to that, YiDong Electronics is 1.15 times more volatile than Yantai North Andre. It trades about 0.03 of its total potential returns per unit of risk. Yantai North Andre is currently generating about 0.03 per unit of volatility. If you would invest  2,398  in Yantai North Andre on October 9, 2024 and sell it today you would earn a total of  290.00  from holding Yantai North Andre or generate 12.09% return on investment over 90 days.

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

YiDong Electronics Technology  vs.  Yantai North Andre

YiDong Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in YiDong Electronics Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YiDong Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Yantai North Andre

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yantai North Andre are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yantai North may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with YiDong Electronics and Yantai North

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

The idea behind YiDong Electronics Technology and Yantai North Andre 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.