Correlation Between Yem Chio and Capital Futures

Can any of the company-specific risk be diversified away by investing in both Yem Chio and Capital Futures 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 Capital Futures 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 Capital Futures Corp, you can compare the effects of market volatilities on Yem Chio and Capital Futures 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 Capital Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yem Chio and Capital Futures.

Diversification Opportunities for Yem Chio and Capital Futures

-0.71

Correlation Coefficient

Yem Chio  Capital Futures

Pay attention - limited upside

The 3 months correlation between Yem and Capital is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Yem Chio Co and Capital Futures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Futures Corp 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 Capital Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Futures Corp has no effect on the direction of Yem Chio i.e., Yem Chio and Capital Futures go up and down completely randomly.

Pair Corralation between Yem Chio and Capital Futures

Assuming the 90 days trading horizon Yem Chio is expected to generate 2.17 times less return on investment than Capital Futures. In addition to that, Yem Chio is 1.31 times more volatile than Capital Futures Corp. It trades about 0.03 of its total potential returns per unit of risk. Capital Futures Corp is currently generating about 0.09 per unit of volatility. If you would invest  3,675  in Capital Futures Corp on September 20, 2024 and sell it today you would earn a total of  2,085  from holding Capital Futures Corp or generate 56.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Yem Chio Co  vs.  Capital Futures Corp

Yem Chio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yem Chio Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Capital Futures Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Futures Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Capital Futures is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Yem Chio and Capital Futures

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

The idea behind Yem Chio Co and Capital Futures 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.