Correlation Between Emerge Commerce and Yunji

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

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

Diversification Opportunities for Emerge Commerce and Yunji

0.15

Correlation Coefficient

Emerge Commerce  Yunji

Average diversification

The 3 months correlation between Emerge and Yunji is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Emerge Commerce and Yunji Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunji Inc and Emerge Commerce 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 Emerge Commerce are associated (or correlated) with Yunji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunji Inc has no effect on the direction of Emerge Commerce i.e., Emerge Commerce and Yunji go up and down completely randomly.

Pair Corralation between Emerge Commerce and Yunji

Assuming the 90 days horizon Emerge Commerce is expected to generate 20.05 times more return on investment than Yunji. However, Emerge Commerce is 20.05 times more volatile than Yunji Inc. It trades about 0.11 of its potential returns per unit of risk. Yunji Inc is currently generating about 0.02 per unit of risk. If you would invest  2.50  in Emerge Commerce on September 3, 2024 and sell it today you would earn a total of  0.01  from holding Emerge Commerce or generate 0.4% return on investment over 90 days.

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

Emerge Commerce  vs.  Yunji Inc

Emerge Commerce

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerge Commerce are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent primary indicators, Emerge Commerce reported solid returns over the last few months and may actually be approaching a breakup point.

Yunji Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yunji Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Yunji may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Emerge Commerce and Yunji

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

The idea behind Emerge Commerce and Yunji Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.