Correlation Between Nasdaq and Yuan High

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

By analyzing existing cross correlation between Nasdaq Inc and Yuan High Tech Development, you can compare the effects of market volatilities on Nasdaq and Yuan High 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 Yuan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Yuan High.

Diversification Opportunities for Nasdaq and Yuan High

-0.8

Correlation Coefficient

Nasdaq  Yuan High

Pay attention - limited upside

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

Pair Corralation between Nasdaq and Yuan High

Given the investment horizon of 90 days Nasdaq is expected to generate 3.12 times less return on investment than Yuan High. But when comparing it to its historical volatility, Nasdaq Inc is 2.54 times less risky than Yuan High. It trades about 0.05 of its potential returns per unit of risk. Yuan High Tech Development is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,918  in Yuan High Tech Development on September 13, 2024 and sell it today you would earn a total of  8,532  from holding Yuan High Tech Development or generate 123.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.96%
Values	Daily Returns

Nasdaq Inc  vs.  Yuan High Tech Development

Nasdaq Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yuan High Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yuan High Tech Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yuan High is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nasdaq and Yuan High

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

The idea behind Nasdaq Inc and Yuan High Tech Development 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.