Correlation Between Yelp and InFintT Acquisition

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Can any of the company-specific risk be diversified away by investing in both Yelp and InFintT Acquisition 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 Yelp and InFintT Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yelp Inc and InFintT Acquisition Corp, you can compare the effects of market volatilities on Yelp and InFintT Acquisition 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 Yelp with a short position of InFintT Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yelp and InFintT Acquisition.

Diversification Opportunities for Yelp and InFintT Acquisition

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Yelp and InFintT is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Yelp Inc and InFintT Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InFintT Acquisition Corp and Yelp 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 Yelp Inc are associated (or correlated) with InFintT Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InFintT Acquisition Corp has no effect on the direction of Yelp i.e., Yelp and InFintT Acquisition go up and down completely randomly.

Pair Corralation between Yelp and InFintT Acquisition

Given the investment horizon of 90 days Yelp Inc is expected to generate 0.22 times more return on investment than InFintT Acquisition. However, Yelp Inc is 4.53 times less risky than InFintT Acquisition. It trades about -0.02 of its potential returns per unit of risk. InFintT Acquisition Corp is currently generating about -0.1 per unit of risk. If you would invest  4,383  in Yelp Inc on October 3, 2024 and sell it today you would lose (524.00) from holding Yelp Inc or give up 11.96% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy69.29%
ValuesDaily Returns

Yelp Inc  vs.  InFintT Acquisition Corp

 Performance 
       Timeline  
Yelp Inc 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Yelp Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Yelp reported solid returns over the last few months and may actually be approaching a breakup point.
InFintT Acquisition Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days InFintT Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, InFintT Acquisition is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Yelp and InFintT Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yelp and InFintT Acquisition

The main advantage of trading using opposite Yelp and InFintT Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yelp position performs unexpectedly, InFintT Acquisition 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 InFintT Acquisition will offset losses from the drop in InFintT Acquisition's long position.
The idea behind Yelp Inc and InFintT Acquisition Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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