Correlation Between Epoxy Base and Yonyou Auto

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

By analyzing existing cross correlation between Epoxy Base Electronic and Yonyou Auto Information, you can compare the effects of market volatilities on Epoxy Base and Yonyou Auto 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 Epoxy Base with a short position of Yonyou Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epoxy Base and Yonyou Auto.

Diversification Opportunities for Epoxy Base and Yonyou Auto

0.97

Correlation Coefficient

Epoxy Base  Yonyou Auto

Almost no diversification

The 3 months correlation between Epoxy and Yonyou is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Epoxy Base Electronic and Yonyou Auto Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yonyou Auto Information and Epoxy Base 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 Epoxy Base Electronic are associated (or correlated) with Yonyou Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yonyou Auto Information has no effect on the direction of Epoxy Base i.e., Epoxy Base and Yonyou Auto go up and down completely randomly.

Pair Corralation between Epoxy Base and Yonyou Auto

Assuming the 90 days trading horizon Epoxy Base Electronic is expected to generate 1.0 times more return on investment than Yonyou Auto. However, Epoxy Base is 1.0 times more volatile than Yonyou Auto Information. It trades about 0.17 of its potential returns per unit of risk. Yonyou Auto Information is currently generating about 0.16 per unit of risk. If you would invest  430.00  in Epoxy Base Electronic on September 3, 2024 and sell it today you would earn a total of  161.00  from holding Epoxy Base Electronic or generate 37.44% return on investment over 90 days.

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

Epoxy Base Electronic  vs.  Yonyou Auto Information

Epoxy Base Electronic

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Epoxy Base Electronic are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Epoxy Base sustained solid returns over the last few months and may actually be approaching a breakup point.

Yonyou Auto Information

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yonyou Auto Information are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yonyou Auto sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Epoxy Base and Yonyou Auto

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

The idea behind Epoxy Base Electronic and Yonyou Auto Information 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.