Correlation Between Yonyou Auto and YLZ Information

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

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

Diversification Opportunities for Yonyou Auto and YLZ Information

0.92

Correlation Coefficient

Yonyou Auto  YLZ Information

Almost no diversification

The 3 months correlation between Yonyou and YLZ is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Yonyou Auto Information and YLZ Information Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YLZ Information Tech and Yonyou Auto 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 Yonyou Auto Information are associated (or correlated) with YLZ Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YLZ Information Tech has no effect on the direction of Yonyou Auto i.e., Yonyou Auto and YLZ Information go up and down completely randomly.

Pair Corralation between Yonyou Auto and YLZ Information

Assuming the 90 days trading horizon Yonyou Auto Information is expected to under-perform the YLZ Information. But the stock apears to be less risky and, when comparing its historical volatility, Yonyou Auto Information is 1.27 times less risky than YLZ Information. The stock trades about -0.04 of its potential returns per unit of risk. The YLZ Information Tech is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  368.00  in YLZ Information Tech on December 1, 2024 and sell it today you would lose (10.00) from holding YLZ Information Tech or give up 2.72% of portfolio value over 90 days.

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

Yonyou Auto Information  vs.  YLZ Information Tech

Yonyou Auto Information

Risk-Adjusted Performance

Very Weak

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

YLZ Information Tech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Yonyou Auto and YLZ Information

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

The idea behind Yonyou Auto Information and YLZ Information Tech 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.