Correlation Between Yindu Kitchen and Beijing Seeyon

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Can any of the company-specific risk be diversified away by investing in both Yindu Kitchen and Beijing Seeyon 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 Yindu Kitchen and Beijing Seeyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yindu Kitchen Equipment and Beijing Seeyon Internet, you can compare the effects of market volatilities on Yindu Kitchen and Beijing Seeyon 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 Yindu Kitchen with a short position of Beijing Seeyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yindu Kitchen and Beijing Seeyon.

Diversification Opportunities for Yindu Kitchen and Beijing Seeyon

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between Yindu and Beijing is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Yindu Kitchen Equipment and Beijing Seeyon Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Seeyon Internet and Yindu Kitchen 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 Yindu Kitchen Equipment are associated (or correlated) with Beijing Seeyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Seeyon Internet has no effect on the direction of Yindu Kitchen i.e., Yindu Kitchen and Beijing Seeyon go up and down completely randomly.

Pair Corralation between Yindu Kitchen and Beijing Seeyon

Assuming the 90 days trading horizon Yindu Kitchen is expected to generate 1.32 times less return on investment than Beijing Seeyon. But when comparing it to its historical volatility, Yindu Kitchen Equipment is 2.38 times less risky than Beijing Seeyon. It trades about 0.04 of its potential returns per unit of risk. Beijing Seeyon Internet is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,059  in Beijing Seeyon Internet on October 25, 2024 and sell it today you would lose (9.00) from holding Beijing Seeyon Internet or give up 0.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Yindu Kitchen Equipment  vs.  Beijing Seeyon Internet

 Performance 
       Timeline  
Yindu Kitchen Equipment 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Yindu Kitchen Equipment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Yindu Kitchen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Beijing Seeyon Internet 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Seeyon Internet are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Beijing Seeyon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Yindu Kitchen and Beijing Seeyon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yindu Kitchen and Beijing Seeyon

The main advantage of trading using opposite Yindu Kitchen and Beijing Seeyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yindu Kitchen position performs unexpectedly, Beijing Seeyon 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 Beijing Seeyon will offset losses from the drop in Beijing Seeyon's long position.
The idea behind Yindu Kitchen Equipment and Beijing Seeyon Internet 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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