Correlation Between Yantai North and Shandong Publishing

Can any of the company-specific risk be diversified away by investing in both Yantai North and Shandong Publishing 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 Yantai North and Shandong Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yantai North Andre and Shandong Publishing Media, you can compare the effects of market volatilities on Yantai North and Shandong Publishing 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 Yantai North with a short position of Shandong Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yantai North and Shandong Publishing.

Diversification Opportunities for Yantai North and Shandong Publishing

-0.25

Correlation Coefficient

Yantai North  Shandong Publishing

Very good diversification

The 3 months correlation between Yantai and Shandong is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Yantai North Andre and Shandong Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Publishing Media and Yantai North 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 Yantai North Andre are associated (or correlated) with Shandong Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Publishing Media has no effect on the direction of Yantai North i.e., Yantai North and Shandong Publishing go up and down completely randomly.

Pair Corralation between Yantai North and Shandong Publishing

Assuming the 90 days trading horizon Yantai North is expected to generate 2.28 times less return on investment than Shandong Publishing. In addition to that, Yantai North is 1.21 times more volatile than Shandong Publishing Media. It trades about 0.06 of its total potential returns per unit of risk. Shandong Publishing Media is currently generating about 0.17 per unit of volatility. If you would invest  1,038  in Shandong Publishing Media on September 26, 2024 and sell it today you would earn a total of  102.00  from holding Shandong Publishing Media or generate 9.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Yantai North Andre  vs.  Shandong Publishing Media

Yantai North Andre

Risk-Adjusted Performance

8 of 100

OK

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

Shandong Publishing Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yantai North and Shandong Publishing

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

The idea behind Yantai North Andre and Shandong Publishing Media 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.