Correlation Between Kandi Technologies and Yelp

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

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

Diversification Opportunities for Kandi Technologies and Yelp

-0.8

Correlation Coefficient

Kandi Technologies  Yelp

Pay attention - limited upside

The 3 months correlation between Kandi and Yelp is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kandi Technologies Group and Yelp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yelp Inc and Kandi Technologies 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 Kandi Technologies Group are associated (or correlated) with Yelp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yelp Inc has no effect on the direction of Kandi Technologies i.e., Kandi Technologies and Yelp go up and down completely randomly.

Pair Corralation between Kandi Technologies and Yelp

Given the investment horizon of 90 days Kandi Technologies Group is expected to under-perform the Yelp. In addition to that, Kandi Technologies is 1.79 times more volatile than Yelp Inc. It trades about -0.03 of its total potential returns per unit of risk. Yelp Inc is currently generating about 0.05 per unit of volatility. If you would invest  2,638  in Yelp Inc on October 9, 2024 and sell it today you would earn a total of  1,366  from holding Yelp Inc or generate 51.78% return on investment over 90 days.

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

Kandi Technologies Group  vs.  Yelp Inc

Kandi Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kandi Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Yelp Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yelp Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Yelp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kandi Technologies and Yelp

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

The idea behind Kandi Technologies Group and Yelp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.