Correlation Between YAOKO CO and Whirlpool

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

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

Diversification Opportunities for YAOKO CO and Whirlpool

-0.01

Correlation Coefficient

YAOKO CO  Whirlpool

Good diversification

The 3 months correlation between YAOKO and Whirlpool is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding YAOKO LTD and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of YAOKO CO i.e., YAOKO CO and Whirlpool go up and down completely randomly.

Pair Corralation between YAOKO CO and Whirlpool

Assuming the 90 days horizon YAOKO LTD is expected to under-perform the Whirlpool. But the stock apears to be less risky and, when comparing its historical volatility, YAOKO LTD is 1.81 times less risky than Whirlpool. The stock trades about -0.04 of its potential returns per unit of risk. The Whirlpool is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  9,630  in Whirlpool on October 20, 2024 and sell it today you would earn a total of  2,835  from holding Whirlpool or generate 29.44% return on investment over 90 days.

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

YAOKO LTD  vs.  Whirlpool

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Whirlpool

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Whirlpool are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Whirlpool reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YAOKO CO and Whirlpool

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

The idea behind YAOKO LTD and Whirlpool 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.