Correlation Between YHC and Fresh Grapes

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

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

Diversification Opportunities for YHC and Fresh Grapes

-0.62

Correlation Coefficient

YHC  Fresh Grapes

Excellent diversification

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

Pair Corralation between YHC and Fresh Grapes

Considering the 90-day investment horizon YHC is expected to under-perform the Fresh Grapes. But the stock apears to be less risky and, when comparing its historical volatility, YHC is 1.07 times less risky than Fresh Grapes. The stock trades about -0.07 of its potential returns per unit of risk. The Fresh Grapes LLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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

YHC  vs.  Fresh Grapes LLC

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.

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.

Pair Trading with YHC and Fresh Grapes

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

The idea behind YHC and Fresh Grapes LLC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.