Correlation Between One World and Yoma Strategic

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

By analyzing existing cross correlation between One World Universe and Yoma Strategic Holdings, you can compare the effects of market volatilities on One World and Yoma Strategic 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 One World with a short position of Yoma Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of One World and Yoma Strategic.

Diversification Opportunities for One World and Yoma Strategic

0.08

Correlation Coefficient

One World  Yoma Strategic

Significant diversification

The 3 months correlation between One and Yoma is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding One World Universe and Yoma Strategic Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yoma Strategic Holdings and One World 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 One World Universe are associated (or correlated) with Yoma Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yoma Strategic Holdings has no effect on the direction of One World i.e., One World and Yoma Strategic go up and down completely randomly.

Pair Corralation between One World and Yoma Strategic

Given the investment horizon of 90 days One World Universe is expected to generate 1.24 times more return on investment than Yoma Strategic. However, One World is 1.24 times more volatile than Yoma Strategic Holdings. It trades about 0.06 of its potential returns per unit of risk. Yoma Strategic Holdings is currently generating about 0.01 per unit of risk. If you would invest  0.68  in One World Universe on September 30, 2024 and sell it today you would earn a total of  0.03  from holding One World Universe or generate 4.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

One World Universe  vs.  Yoma Strategic Holdings

One World Universe

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in One World Universe are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, One World showed solid returns over the last few months and may actually be approaching a breakup point.

Yoma Strategic Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yoma Strategic Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with One World and Yoma Strategic

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

The idea behind One World Universe and Yoma Strategic Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.