Correlation Between YAOKO CO and Power Metals

Can any of the company-specific risk be diversified away by investing in both YAOKO CO and Power Metals 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 YAOKO CO and Power Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YAOKO LTD and Power Metals Corp, you can compare the effects of market volatilities on YAOKO CO and Power Metals 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 YAOKO CO with a short position of Power Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of YAOKO CO and Power Metals.

Diversification Opportunities for YAOKO CO and Power Metals

-0.34

Correlation Coefficient

YAOKO CO  Power Metals

Very good diversification

The 3 months correlation between YAOKO and Power is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding YAOKO LTD and Power Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metals Corp and YAOKO CO 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 YAOKO LTD are associated (or correlated) with Power Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metals Corp has no effect on the direction of YAOKO CO i.e., YAOKO CO and Power Metals go up and down completely randomly.

Pair Corralation between YAOKO CO and Power Metals

Assuming the 90 days horizon YAOKO LTD is expected to under-perform the Power Metals. But the stock apears to be less risky and, when comparing its historical volatility, YAOKO LTD is 3.94 times less risky than Power Metals. The stock trades about -0.02 of its potential returns per unit of risk. The Power Metals Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Power Metals Corp on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Power Metals Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

YAOKO LTD  vs.  Power Metals Corp

YAOKO LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YAOKO LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, YAOKO CO is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Power Metals Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Metals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Power Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with YAOKO CO and Power Metals

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

The idea behind YAOKO LTD and Power Metals 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.