Correlation Between Aurora Optoelectronics and Youngy Health

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

By analyzing existing cross correlation between Aurora Optoelectronics Co and Youngy Health Co, you can compare the effects of market volatilities on Aurora Optoelectronics and Youngy Health 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 Aurora Optoelectronics with a short position of Youngy Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Optoelectronics and Youngy Health.

Diversification Opportunities for Aurora Optoelectronics and Youngy Health

0.69

Correlation Coefficient

Aurora Optoelectronics  Youngy Health

Poor diversification

The 3 months correlation between Aurora and Youngy is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Optoelectronics Co and Youngy Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngy Health and Aurora Optoelectronics 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 Aurora Optoelectronics Co are associated (or correlated) with Youngy Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngy Health has no effect on the direction of Aurora Optoelectronics i.e., Aurora Optoelectronics and Youngy Health go up and down completely randomly.

Pair Corralation between Aurora Optoelectronics and Youngy Health

Assuming the 90 days trading horizon Aurora Optoelectronics Co is expected to generate 1.64 times more return on investment than Youngy Health. However, Aurora Optoelectronics is 1.64 times more volatile than Youngy Health Co. It trades about 0.05 of its potential returns per unit of risk. Youngy Health Co is currently generating about -0.05 per unit of risk. If you would invest  260.00  in Aurora Optoelectronics Co on December 4, 2024 and sell it today you would earn a total of  22.00  from holding Aurora Optoelectronics Co or generate 8.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

Aurora Optoelectronics Co  vs.  Youngy Health Co

Aurora Optoelectronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Optoelectronics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aurora Optoelectronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Youngy Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Youngy Health Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aurora Optoelectronics and Youngy Health

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

The idea behind Aurora Optoelectronics Co and Youngy Health 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.

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