Correlation Between Xinjiang Tianrun and Yankershop Food

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

By analyzing existing cross correlation between Xinjiang Tianrun Dairy and Yankershop Food Co, you can compare the effects of market volatilities on Xinjiang Tianrun and Yankershop Food 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 Xinjiang Tianrun with a short position of Yankershop Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Tianrun and Yankershop Food.

Diversification Opportunities for Xinjiang Tianrun and Yankershop Food

0.15

Correlation Coefficient

Xinjiang Tianrun  Yankershop Food

Average diversification

The 3 months correlation between Xinjiang and Yankershop is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Tianrun Dairy and Yankershop Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yankershop Food and Xinjiang Tianrun 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 Xinjiang Tianrun Dairy are associated (or correlated) with Yankershop Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yankershop Food has no effect on the direction of Xinjiang Tianrun i.e., Xinjiang Tianrun and Yankershop Food go up and down completely randomly.

Pair Corralation between Xinjiang Tianrun and Yankershop Food

Assuming the 90 days trading horizon Xinjiang Tianrun Dairy is expected to under-perform the Yankershop Food. But the stock apears to be less risky and, when comparing its historical volatility, Xinjiang Tianrun Dairy is 1.08 times less risky than Yankershop Food. The stock trades about -0.05 of its potential returns per unit of risk. The Yankershop Food Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,694  in Yankershop Food Co on October 11, 2024 and sell it today you would earn a total of  1,391  from holding Yankershop Food Co or generate 29.63% return on investment over 90 days.

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

Xinjiang Tianrun Dairy  vs.  Yankershop Food Co

Xinjiang Tianrun Dairy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Tianrun Dairy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Tianrun may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Yankershop Food

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yankershop Food Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yankershop Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xinjiang Tianrun and Yankershop Food

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

The idea behind Xinjiang Tianrun Dairy and Yankershop Food Co 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.