Correlation Between Yellow Pages and Stella Jones

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

By analyzing existing cross correlation between Yellow Pages Limited and Stella Jones, you can compare the effects of market volatilities on Yellow Pages and Stella Jones 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 Yellow Pages with a short position of Stella Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Pages and Stella Jones.

Diversification Opportunities for Yellow Pages and Stella Jones

-0.58

Correlation Coefficient

Yellow Pages  Stella Jones

Excellent diversification

The 3 months correlation between Yellow and Stella is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and Stella Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stella Jones and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with Stella Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stella Jones has no effect on the direction of Yellow Pages i.e., Yellow Pages and Stella Jones go up and down completely randomly.

Pair Corralation between Yellow Pages and Stella Jones

Given the investment horizon of 90 days Yellow Pages is expected to generate 13.61 times less return on investment than Stella Jones. But when comparing it to its historical volatility, Yellow Pages Limited is 1.21 times less risky than Stella Jones. It trades about 0.0 of its potential returns per unit of risk. Stella Jones is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,774  in Stella Jones on October 3, 2024 and sell it today you would earn a total of  2,345  from holding Stella Jones or generate 49.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Yellow Pages Limited  vs.  Stella Jones

Yellow Pages Limited

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Yellow Pages displayed solid returns over the last few months and may actually be approaching a breakup point.

Stella Jones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stella Jones has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Yellow Pages and Stella Jones

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

The idea behind Yellow Pages Limited and Stella Jones 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.