Correlation Between Suzhou Oriental and Yindu Kitchen

Can any of the company-specific risk be diversified away by investing in both Suzhou Oriental and Yindu Kitchen 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 Suzhou Oriental and Yindu Kitchen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Suzhou Oriental Semiconductor and Yindu Kitchen Equipment, you can compare the effects of market volatilities on Suzhou Oriental and Yindu Kitchen 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 Suzhou Oriental with a short position of Yindu Kitchen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzhou Oriental and Yindu Kitchen.

Diversification Opportunities for Suzhou Oriental and Yindu Kitchen

0.21

Correlation Coefficient

Suzhou Oriental  Yindu Kitchen

Modest diversification

The 3 months correlation between Suzhou and Yindu is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Suzhou Oriental Semiconductor and Yindu Kitchen Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yindu Kitchen Equipment and Suzhou Oriental 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 Suzhou Oriental Semiconductor are associated (or correlated) with Yindu Kitchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yindu Kitchen Equipment has no effect on the direction of Suzhou Oriental i.e., Suzhou Oriental and Yindu Kitchen go up and down completely randomly.

Pair Corralation between Suzhou Oriental and Yindu Kitchen

Assuming the 90 days trading horizon Suzhou Oriental Semiconductor is expected to under-perform the Yindu Kitchen. In addition to that, Suzhou Oriental is 1.35 times more volatile than Yindu Kitchen Equipment. It trades about -0.04 of its total potential returns per unit of risk. Yindu Kitchen Equipment is currently generating about 0.08 per unit of volatility. If you would invest  2,435  in Yindu Kitchen Equipment on December 24, 2024 and sell it today you would earn a total of  213.00  from holding Yindu Kitchen Equipment or generate 8.75% return on investment over 90 days.

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

Suzhou Oriental Semiconductor  vs.  Yindu Kitchen Equipment

Suzhou Oriental Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suzhou Oriental Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Yindu Kitchen Equipment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yindu Kitchen Equipment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yindu Kitchen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Suzhou Oriental and Yindu Kitchen

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

The idea behind Suzhou Oriental Semiconductor and Yindu Kitchen Equipment 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.