Correlation Between Algorand and YY Group

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

By analyzing existing cross correlation between Algorand and YY Group Holding, you can compare the effects of market volatilities on Algorand and YY Group 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 Algorand with a short position of YY Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and YY Group.

Diversification Opportunities for Algorand and YY Group

0.74

Correlation Coefficient

Algorand  YY Group

Poor diversification

The 3 months correlation between Algorand and YYGH is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and YY Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Group Holding and Algorand 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 Algorand are associated (or correlated) with YY Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Group Holding has no effect on the direction of Algorand i.e., Algorand and YY Group go up and down completely randomly.

Pair Corralation between Algorand and YY Group

Assuming the 90 days trading horizon Algorand is expected to generate 1.0 times more return on investment than YY Group. However, Algorand is 1.0 times more volatile than YY Group Holding. It trades about 0.09 of its potential returns per unit of risk. YY Group Holding is currently generating about -0.01 per unit of risk. If you would invest  19.00  in Algorand on October 9, 2024 and sell it today you would earn a total of  19.00  from holding Algorand or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.67%
Values	Daily Returns

Algorand  vs.  YY Group Holding

Algorand

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Algorand exhibited solid returns over the last few months and may actually be approaching a breakup point.

YY Group Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YY Group Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, YY Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algorand and YY Group

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

The idea behind Algorand and YY Group Holding 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 Stocks Directory module to find actively traded stocks across global markets.