Correlation Between AZZ Incorporated and YSX Tech

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

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

Diversification Opportunities for AZZ Incorporated and YSX Tech

0.12

Correlation Coefficient

AZZ Incorporated  YSX Tech

Average diversification

The 3 months correlation between AZZ and YSX is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding AZZ Incorporated and YSX Tech Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YSX Tech Co, and AZZ Incorporated 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 AZZ Incorporated are associated (or correlated) with YSX Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YSX Tech Co, has no effect on the direction of AZZ Incorporated i.e., AZZ Incorporated and YSX Tech go up and down completely randomly.

Pair Corralation between AZZ Incorporated and YSX Tech

Considering the 90-day investment horizon AZZ Incorporated is expected to generate 9.17 times less return on investment than YSX Tech. But when comparing it to its historical volatility, AZZ Incorporated is 7.9 times less risky than YSX Tech. It trades about 0.08 of its potential returns per unit of risk. YSX Tech Co, is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  431.00  in YSX Tech Co, on October 11, 2024 and sell it today you would earn a total of  29.00  from holding YSX Tech Co, or generate 6.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	2.83%
Values	Daily Returns

AZZ Incorporated  vs.  YSX Tech Co,

AZZ Incorporated

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AZZ Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, AZZ Incorporated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

YSX Tech Co,

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YSX Tech Co, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, YSX Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AZZ Incorporated and YSX Tech

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

The idea behind AZZ Incorporated and YSX Tech Co, 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.