Correlation Between Willdan and YY Group

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

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

Diversification Opportunities for Willdan and YY Group

-0.58

Correlation Coefficient

Willdan  YY Group

Excellent diversification

The 3 months correlation between Willdan and YYGH is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Willdan Group 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 Willdan 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 Willdan Group 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 Willdan i.e., Willdan and YY Group go up and down completely randomly.

Pair Corralation between Willdan and YY Group

Given the investment horizon of 90 days Willdan Group is expected to under-perform the YY Group. But the stock apears to be less risky and, when comparing its historical volatility, Willdan Group is 2.18 times less risky than YY Group. The stock trades about -0.09 of its potential returns per unit of risk. The YY Group Holding is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  121.00  in YY Group Holding on October 6, 2024 and sell it today you would earn a total of  56.00  from holding YY Group Holding or generate 46.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Willdan Group  vs.  YY Group Holding

Willdan Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willdan Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm 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 Willdan and YY Group

The main advantage of trading using opposite Willdan and YY Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willdan 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 Willdan Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.