Correlation Between Lycos Energy and Yellow Pages

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

By analyzing existing cross correlation between Lycos Energy and Yellow Pages Limited, you can compare the effects of market volatilities on Lycos Energy and Yellow Pages 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 Lycos Energy with a short position of Yellow Pages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lycos Energy and Yellow Pages.

Diversification Opportunities for Lycos Energy and Yellow Pages

-0.6

Correlation Coefficient

Lycos Energy  Yellow Pages

Excellent diversification

The 3 months correlation between Lycos and Yellow is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lycos Energy and Yellow Pages Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yellow Pages Limited and Lycos Energy 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 Lycos Energy are associated (or correlated) with Yellow Pages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yellow Pages Limited has no effect on the direction of Lycos Energy i.e., Lycos Energy and Yellow Pages go up and down completely randomly.

Pair Corralation between Lycos Energy and Yellow Pages

Assuming the 90 days horizon Lycos Energy is expected to under-perform the Yellow Pages. In addition to that, Lycos Energy is 1.81 times more volatile than Yellow Pages Limited. It trades about -0.05 of its total potential returns per unit of risk. Yellow Pages Limited is currently generating about 0.14 per unit of volatility. If you would invest  904.00  in Yellow Pages Limited on October 4, 2024 and sell it today you would earn a total of  281.00  from holding Yellow Pages Limited or generate 31.08% return on investment over 90 days.

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

Lycos Energy  vs.  Yellow Pages Limited

Lycos Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Yellow Pages Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Yellow Pages displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lycos Energy and Yellow Pages

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

The idea behind Lycos Energy and Yellow Pages Limited 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..