Correlation Between YD More and Iargento

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

By analyzing existing cross correlation between YD More Investments and Iargento Hi Tech, you can compare the effects of market volatilities on YD More and Iargento 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 YD More with a short position of Iargento. Check out your portfolio center. Please also check ongoing floating volatility patterns of YD More and Iargento.

Diversification Opportunities for YD More and Iargento

-0.31

Correlation Coefficient

YD More  Iargento

Very good diversification

The 3 months correlation between MRIN and Iargento is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding YD More Investments and Iargento Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iargento Hi Tech and YD More 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 YD More Investments are associated (or correlated) with Iargento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iargento Hi Tech has no effect on the direction of YD More i.e., YD More and Iargento go up and down completely randomly.

Pair Corralation between YD More and Iargento

Assuming the 90 days trading horizon YD More Investments is expected to generate 0.6 times more return on investment than Iargento. However, YD More Investments is 1.67 times less risky than Iargento. It trades about 0.47 of its potential returns per unit of risk. Iargento Hi Tech is currently generating about -0.02 per unit of risk. If you would invest  82,740  in YD More Investments on September 2, 2024 and sell it today you would earn a total of  50,760  from holding YD More Investments or generate 61.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.87%
Values	Daily Returns

YD More Investments  vs.  Iargento Hi Tech

YD More Investments

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in YD More Investments are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YD More sustained solid returns over the last few months and may actually be approaching a breakup point.

Iargento Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iargento Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iargento is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with YD More and Iargento

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

The idea behind YD More Investments and Iargento Hi Tech 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.