Correlation Between Verisk Analytics and YY Group

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

By analyzing existing cross correlation between Verisk Analytics and YY Group Holding, you can compare the effects of market volatilities on Verisk Analytics and YY Group 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 Verisk Analytics with a short position of YY Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verisk Analytics and YY Group.

Diversification Opportunities for Verisk Analytics and YY Group

0.76

Correlation Coefficient

Verisk Analytics  YY Group

Poor diversification

The 3 months correlation between Verisk and YYGH is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Verisk Analytics and YY Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Group Holding and Verisk Analytics 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 Verisk Analytics are associated (or correlated) with YY Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Group Holding has no effect on the direction of Verisk Analytics i.e., Verisk Analytics and YY Group go up and down completely randomly.

Pair Corralation between Verisk Analytics and YY Group

Given the investment horizon of 90 days Verisk Analytics is expected to under-perform the YY Group. But the stock apears to be less risky and, when comparing its historical volatility, Verisk Analytics is 4.67 times less risky than YY Group. The stock trades about -0.03 of its potential returns per unit of risk. The YY Group Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  168.00  in YY Group Holding on October 6, 2024 and sell it today you would earn a total of  9.00  from holding YY Group Holding or generate 5.36% return on investment over 90 days.

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

Verisk Analytics  vs.  YY Group Holding

Verisk Analytics

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Verisk Analytics is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

YY Group Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YY Group Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical and fundamental indicators, YY Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verisk Analytics and YY Group

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

The idea behind Verisk Analytics and YY Group Holding 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.