Correlation Between Yulon Finance and President Chain

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

Diversification Opportunities for Yulon Finance and President Chain

YulonPresidentDiversified AwayYulonPresidentDiversified Away100%
0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Yulon and President is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp and President Chain Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Chain Store and Yulon Finance 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 Yulon Finance Corp are associated (or correlated) with President Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Chain Store has no effect on the direction of Yulon Finance i.e., Yulon Finance and President Chain go up and down completely randomly.

Pair Corralation between Yulon Finance and President Chain

Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the President Chain. In addition to that, Yulon Finance is 2.14 times more volatile than President Chain Store. It trades about -0.1 of its total potential returns per unit of risk. President Chain Store is currently generating about -0.1 per unit of volatility. If you would invest  29,500  in President Chain Store on November 29, 2024 and sell it today you would lose (2,950) from holding President Chain Store or give up 10.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Yulon Finance Corp  vs.  President Chain Store

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.159941 2912
       Timeline  
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
President Chain Store 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days President Chain Store has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, President Chain 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 3.21.15DecJanFebJanFeb255260265270275

Yulon Finance and President Chain Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.99-5.24-3.48-1.73-0.021.693.475.257.038.81 0.10.20.30.40.50.60.7
JavaScript chart by amCharts 3.21.159941 2912
       Returns  

Pair Trading with Yulon Finance and President Chain

The main advantage of trading using opposite Yulon Finance and President Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance position performs unexpectedly, President Chain 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 President Chain will offset losses from the drop in President Chain's long position.
The idea behind Yulon Finance Corp and President Chain Store 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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