Correlation Between AURUBIS and Yunnan Water

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

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

Diversification Opportunities for AURUBIS and Yunnan Water

-0.54

Correlation Coefficient

AURUBIS  Yunnan Water

Excellent diversification

The 3 months correlation between AURUBIS and Yunnan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding AURUBIS and Yunnan Water Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Water Investment and AURUBIS 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 AURUBIS are associated (or correlated) with Yunnan Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Water Investment has no effect on the direction of AURUBIS i.e., AURUBIS and Yunnan Water go up and down completely randomly.

Pair Corralation between AURUBIS and Yunnan Water

Assuming the 90 days trading horizon AURUBIS is expected to generate 0.43 times more return on investment than Yunnan Water. However, AURUBIS is 2.34 times less risky than Yunnan Water. It trades about 0.13 of its potential returns per unit of risk. Yunnan Water Investment is currently generating about 0.01 per unit of risk. If you would invest  7,695  in AURUBIS on December 25, 2024 and sell it today you would earn a total of  1,280  from holding AURUBIS or generate 16.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

AURUBIS  vs.  Yunnan Water Investment

AURUBIS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AURUBIS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AURUBIS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Yunnan Water Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Water Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Yunnan Water is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AURUBIS and Yunnan Water

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

The idea behind AURUBIS and Yunnan Water Investment 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.