Correlation Between Nasdaq and Yunnan Copper

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

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

Diversification Opportunities for Nasdaq and Yunnan Copper

-0.38

Correlation Coefficient

Nasdaq  Yunnan Copper

Very good diversification

The 3 months correlation between Nasdaq and Yunnan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Yunnan Copper Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Copper and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Yunnan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Copper has no effect on the direction of Nasdaq i.e., Nasdaq and Yunnan Copper go up and down completely randomly.

Pair Corralation between Nasdaq and Yunnan Copper

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Yunnan Copper. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.14 times less risky than Yunnan Copper. The stock trades about -0.03 of its potential returns per unit of risk. The Yunnan Copper Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,265  in Yunnan Copper Co on December 30, 2024 and sell it today you would earn a total of  54.00  from holding Yunnan Copper Co or generate 4.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Nasdaq Inc  vs.  Yunnan Copper Co

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Yunnan Copper

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Copper Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Yunnan Copper is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and Yunnan Copper

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

The idea behind Nasdaq Inc and Yunnan Copper Co 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.