Correlation Between Orient Sec and YiDong Electronics

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

By analyzing existing cross correlation between Orient Sec Co and YiDong Electronics Technology, you can compare the effects of market volatilities on Orient Sec and YiDong Electronics 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 Orient Sec with a short position of YiDong Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Sec and YiDong Electronics.

Diversification Opportunities for Orient Sec and YiDong Electronics

-0.54

Correlation Coefficient

Orient Sec  YiDong Electronics

Excellent diversification

The 3 months correlation between Orient and YiDong is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Orient Sec Co and YiDong Electronics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YiDong Electronics and Orient Sec 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 Orient Sec Co are associated (or correlated) with YiDong Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YiDong Electronics has no effect on the direction of Orient Sec i.e., Orient Sec and YiDong Electronics go up and down completely randomly.

Pair Corralation between Orient Sec and YiDong Electronics

Assuming the 90 days trading horizon Orient Sec Co is expected to under-perform the YiDong Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Orient Sec Co is 1.9 times less risky than YiDong Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The YiDong Electronics Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,033  in YiDong Electronics Technology on October 23, 2024 and sell it today you would earn a total of  534.00  from holding YiDong Electronics Technology or generate 26.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Orient Sec Co  vs.  YiDong Electronics Technology

Orient Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orient Sec Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Orient Sec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

YiDong Electronics

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Orient Sec and YiDong Electronics

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

The idea behind Orient Sec Co and YiDong Electronics Technology 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.