Correlation Between Yem Chio and Fulin Plastic

Can any of the company-specific risk be diversified away by investing in both Yem Chio and Fulin Plastic 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 Yem Chio and Fulin Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yem Chio Co and Fulin Plastic Industry, you can compare the effects of market volatilities on Yem Chio and Fulin Plastic 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 Yem Chio with a short position of Fulin Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yem Chio and Fulin Plastic.

Diversification Opportunities for Yem Chio and Fulin Plastic

0.81

Correlation Coefficient

Yem Chio  Fulin Plastic

Very poor diversification

The 3 months correlation between Yem and Fulin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Yem Chio Co and Fulin Plastic Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulin Plastic Industry and Yem Chio 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 Yem Chio Co are associated (or correlated) with Fulin Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulin Plastic Industry has no effect on the direction of Yem Chio i.e., Yem Chio and Fulin Plastic go up and down completely randomly.

Pair Corralation between Yem Chio and Fulin Plastic

Assuming the 90 days trading horizon Yem Chio is expected to generate 1.37 times less return on investment than Fulin Plastic. In addition to that, Yem Chio is 1.29 times more volatile than Fulin Plastic Industry. It trades about 0.16 of its total potential returns per unit of risk. Fulin Plastic Industry is currently generating about 0.28 per unit of volatility. If you would invest  6,730  in Fulin Plastic Industry on December 21, 2024 and sell it today you would earn a total of  710.00  from holding Fulin Plastic Industry or generate 10.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.21%
Values	Daily Returns

Yem Chio Co  vs.  Fulin Plastic Industry

Yem Chio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yem Chio Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yem Chio may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fulin Plastic Industry

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fulin Plastic Industry are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fulin Plastic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Yem Chio and Fulin Plastic

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

The idea behind Yem Chio Co and Fulin Plastic Industry 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.