Correlation Between Natural Health and Yunji

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

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

Diversification Opportunities for Natural Health and Yunji

0.07

Correlation Coefficient

Natural Health  Yunji

Significant diversification

The 3 months correlation between Natural and Yunji is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trend and Yunji Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunji Inc and Natural Health 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 Natural Health Trend are associated (or correlated) with Yunji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunji Inc has no effect on the direction of Natural Health i.e., Natural Health and Yunji go up and down completely randomly.

Pair Corralation between Natural Health and Yunji

Given the investment horizon of 90 days Natural Health Trend is expected to generate 0.76 times more return on investment than Yunji. However, Natural Health Trend is 1.31 times less risky than Yunji. It trades about 0.05 of its potential returns per unit of risk. Yunji Inc is currently generating about 0.02 per unit of risk. If you would invest  476.00  in Natural Health Trend on December 1, 2024 and sell it today you would earn a total of  10.00  from holding Natural Health Trend or generate 2.1% return on investment over 90 days.

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

Natural Health Trend  vs.  Yunji Inc

Natural Health Trend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natural Health Trend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Natural Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Yunji Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yunji Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Yunji revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Natural Health and Yunji

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

The idea behind Natural Health Trend and Yunji Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.