Correlation Between SEVEN+I HLDGS and YAOKO

Can any of the company-specific risk be diversified away by investing in both SEVEN+I HLDGS and YAOKO 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 SEVEN+I HLDGS and YAOKO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SEVENI HLDGS UNSPADR12 and YAOKO LTD, you can compare the effects of market volatilities on SEVEN+I HLDGS and YAOKO 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 SEVEN+I HLDGS with a short position of YAOKO. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEVEN+I HLDGS and YAOKO.

Diversification Opportunities for SEVEN+I HLDGS and YAOKO

0.22

Correlation Coefficient

SEVEN+I HLDGS  YAOKO

Modest diversification

The 3 months correlation between SEVEN+I and YAOKO is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SEVENI HLDGS UNSPADR12 and YAOKO LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAOKO LTD and SEVEN+I HLDGS 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 SEVENI HLDGS UNSPADR12 are associated (or correlated) with YAOKO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAOKO LTD has no effect on the direction of SEVEN+I HLDGS i.e., SEVEN+I HLDGS and YAOKO go up and down completely randomly.

Pair Corralation between SEVEN+I HLDGS and YAOKO

If you would invest  1,240  in SEVENI HLDGS UNSPADR12 on September 23, 2024 and sell it today you would earn a total of  0.00  from holding SEVENI HLDGS UNSPADR12 or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

SEVENI HLDGS UNSPADR12  vs.  YAOKO LTD

SEVENI HLDGS UNSPADR12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEVENI HLDGS UNSPADR12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, SEVEN+I HLDGS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

YAOKO LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YAOKO LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SEVEN+I HLDGS and YAOKO

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

The idea behind SEVENI HLDGS UNSPADR12 and YAOKO LTD 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.