Correlation Between Yili Chuanning and Yantai North

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

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

Diversification Opportunities for Yili Chuanning and Yantai North

0.51

Correlation Coefficient

Yili Chuanning  Yantai North

Very weak diversification

The 3 months correlation between Yili and Yantai is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Yili Chuanning Biotechnology 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 Yili Chuanning 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 Yili Chuanning Biotechnology 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 Yili Chuanning i.e., Yili Chuanning and Yantai North go up and down completely randomly.

Pair Corralation between Yili Chuanning and Yantai North

Assuming the 90 days trading horizon Yili Chuanning Biotechnology is expected to under-perform the Yantai North. But the stock apears to be less risky and, when comparing its historical volatility, Yili Chuanning Biotechnology is 1.78 times less risky than Yantai North. The stock trades about -0.2 of its potential returns per unit of risk. The Yantai North Andre is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,690  in Yantai North Andre on September 21, 2024 and sell it today you would earn a total of  95.00  from holding Yantai North Andre or generate 3.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Yili Chuanning Biotechnology  vs.  Yantai North Andre

Yili Chuanning Biote

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yili Chuanning Biotechnology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yili Chuanning sustained solid returns over the last few months and may actually be approaching a breakup point.

Yantai North Andre

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yantai North Andre are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yantai North sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yili Chuanning and Yantai North

The main advantage of trading using opposite Yili Chuanning and Yantai North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yili Chuanning 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 Yili Chuanning Biotechnology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.