Correlation Between Giant Manufacturing and Yulon Finance

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

Diversification Opportunities for Giant Manufacturing and Yulon Finance

GiantYulonDiversified AwayGiantYulonDiversified Away100%
0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Giant and Yulon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Yulon Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Finance Corp and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with Yulon Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Finance Corp has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Yulon Finance go up and down completely randomly.

Pair Corralation between Giant Manufacturing and Yulon Finance

Assuming the 90 days trading horizon Giant Manufacturing Co is expected to generate 1.63 times more return on investment than Yulon Finance. However, Giant Manufacturing is 1.63 times more volatile than Yulon Finance Corp. It trades about 0.28 of its potential returns per unit of risk. Yulon Finance Corp is currently generating about 0.16 per unit of risk. If you would invest  14,350  in Giant Manufacturing Co on November 29, 2024 and sell it today you would earn a total of  1,500  from holding Giant Manufacturing Co or generate 10.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Giant Manufacturing Co  vs.  Yulon Finance Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.159921 9941
       Timeline  
Giant Manufacturing 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Giant Manufacturing Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Giant Manufacturing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb140145150155160
Yulon Finance Corp 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Yulon Finance Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Yulon Finance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb100105110115120

Giant Manufacturing and Yulon Finance Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.27-4.7-3.12-1.550.01.553.144.746.347.94 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.159921 9941
       Returns  

Pair Trading with Giant Manufacturing and Yulon Finance

The main advantage of trading using opposite Giant Manufacturing and Yulon Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Yulon Finance 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 Yulon Finance will offset losses from the drop in Yulon Finance's long position.
The idea behind Giant Manufacturing Co and Yulon Finance Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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