Correlation Between Fresh Grapes and YHC

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

By analyzing existing cross correlation between Fresh Grapes LLC and YHC, you can compare the effects of market volatilities on Fresh Grapes and YHC 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 Fresh Grapes with a short position of YHC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Grapes and YHC.

Diversification Opportunities for Fresh Grapes and YHC

-0.62

Correlation Coefficient

Fresh Grapes  YHC

Excellent diversification

The 3 months correlation between Fresh and YHC is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and YHC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YHC and Fresh Grapes 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 Fresh Grapes LLC are associated (or correlated) with YHC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YHC has no effect on the direction of Fresh Grapes i.e., Fresh Grapes and YHC go up and down completely randomly.

Pair Corralation between Fresh Grapes and YHC

Given the investment horizon of 90 days Fresh Grapes LLC is expected to generate 1.07 times more return on investment than YHC. However, Fresh Grapes is 1.07 times more volatile than YHC. It trades about 0.04 of its potential returns per unit of risk. YHC is currently generating about -0.07 per unit of risk. If you would invest  102.00  in Fresh Grapes LLC on October 23, 2024 and sell it today you would lose (33.00) from holding Fresh Grapes LLC or give up 32.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.68%
Values	Daily Returns

Fresh Grapes LLC  vs.  YHC

Fresh Grapes LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresh Grapes LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

YHC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YHC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, YHC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresh Grapes and YHC

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

The idea behind Fresh Grapes LLC and YHC 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.