Correlation Between Yulon Finance and Nak Sealing

Can any of the company-specific risk be diversified away by investing in both Yulon Finance and Nak Sealing 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 Nak Sealing 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 Nak Sealing Technologies, you can compare the effects of market volatilities on Yulon Finance and Nak Sealing 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 Nak Sealing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and Nak Sealing.

Diversification Opportunities for Yulon Finance and Nak Sealing

0.31

Correlation Coefficient

Yulon Finance  Nak Sealing

Weak diversification

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

Pair Corralation between Yulon Finance and Nak Sealing

Assuming the 90 days trading horizon Yulon Finance Corp is expected to generate 2.18 times more return on investment than Nak Sealing. However, Yulon Finance is 2.18 times more volatile than Nak Sealing Technologies. It trades about 0.13 of its potential returns per unit of risk. Nak Sealing Technologies is currently generating about 0.1 per unit of risk. If you would invest  10,150  in Yulon Finance Corp on December 21, 2024 and sell it today you would earn a total of  1,500  from holding Yulon Finance Corp or generate 14.78% return on investment over 90 days.

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

Yulon Finance Corp  vs.  Nak Sealing Technologies

Yulon Finance Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yulon Finance Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yulon Finance showed solid returns over the last few months and may actually be approaching a breakup point.

Nak Sealing Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nak Sealing Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Nak Sealing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Yulon Finance and Nak Sealing

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

The idea behind Yulon Finance Corp and Nak Sealing Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.