Correlation Between ALERION CLEANPOWER and YAOKO

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

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

Diversification Opportunities for ALERION CLEANPOWER and YAOKO

0.33

Correlation Coefficient

ALERION CLEANPOWER  YAOKO

Weak diversification

The 3 months correlation between ALERION and YAOKO is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and YAOKO LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAOKO LTD and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with YAOKO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAOKO LTD has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and YAOKO go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and YAOKO

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the YAOKO. In addition to that, ALERION CLEANPOWER is 1.68 times more volatile than YAOKO LTD. It trades about -0.04 of its total potential returns per unit of risk. YAOKO LTD is currently generating about 0.03 per unit of volatility. If you would invest  4,760  in YAOKO LTD on September 19, 2024 and sell it today you would earn a total of  890.00  from holding YAOKO LTD or generate 18.7% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  YAOKO LTD

ALERION CLEANPOWER

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALERION CLEANPOWER are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALERION CLEANPOWER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

YAOKO LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YAOKO LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ALERION CLEANPOWER and YAOKO

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

The idea behind ALERION CLEANPOWER and YAOKO LTD 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.