Correlation Between YAOKO CO and Corporate Office

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

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

Diversification Opportunities for YAOKO CO and Corporate Office

0.29

Correlation Coefficient

YAOKO CO  Corporate Office

Modest diversification

The 3 months correlation between YAOKO and Corporate is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding YAOKO LTD and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of YAOKO CO i.e., YAOKO CO and Corporate Office go up and down completely randomly.

Pair Corralation between YAOKO CO and Corporate Office

Assuming the 90 days horizon YAOKO CO is expected to generate 1.49 times less return on investment than Corporate Office. But when comparing it to its historical volatility, YAOKO LTD is 1.09 times less risky than Corporate Office. It trades about 0.03 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,263  in Corporate Office Properties on October 23, 2024 and sell it today you would earn a total of  617.00  from holding Corporate Office Properties or generate 27.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

YAOKO LTD  vs.  Corporate Office Properties

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.

Corporate Office Pro

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with YAOKO CO and Corporate Office

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

The idea behind YAOKO LTD and Corporate Office Properties 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.