Correlation Between Youyou Foods and Nanjing Canatal

Can any of the company-specific risk be diversified away by investing in both Youyou Foods and Nanjing Canatal 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 Youyou Foods and Nanjing Canatal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Youyou Foods Co and Nanjing Canatal Data, you can compare the effects of market volatilities on Youyou Foods and Nanjing Canatal 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 Youyou Foods with a short position of Nanjing Canatal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youyou Foods and Nanjing Canatal.

Diversification Opportunities for Youyou Foods and Nanjing Canatal

0.36

Correlation Coefficient

Youyou Foods  Nanjing Canatal

Weak diversification

The 3 months correlation between Youyou and Nanjing is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Youyou Foods Co and Nanjing Canatal Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Canatal Data and Youyou Foods 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 Youyou Foods Co are associated (or correlated) with Nanjing Canatal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Canatal Data has no effect on the direction of Youyou Foods i.e., Youyou Foods and Nanjing Canatal go up and down completely randomly.

Pair Corralation between Youyou Foods and Nanjing Canatal

Assuming the 90 days trading horizon Youyou Foods Co is expected to under-perform the Nanjing Canatal. But the stock apears to be less risky and, when comparing its historical volatility, Youyou Foods Co is 1.86 times less risky than Nanjing Canatal. The stock trades about -0.09 of its potential returns per unit of risk. The Nanjing Canatal Data is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  869.00  in Nanjing Canatal Data on October 25, 2024 and sell it today you would lose (21.00) from holding Nanjing Canatal Data or give up 2.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Youyou Foods Co  vs.  Nanjing Canatal Data

Youyou Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Youyou Foods Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Youyou Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Nanjing Canatal Data

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Canatal Data are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Canatal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Youyou Foods and Nanjing Canatal

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

The idea behind Youyou Foods Co and Nanjing Canatal Data 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.