Correlation Between YHN Acquisition and Melar Acquisition

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

By analyzing existing cross correlation between YHN Acquisition I and Melar Acquisition Corp, you can compare the effects of market volatilities on YHN Acquisition and Melar 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 YHN Acquisition with a short position of Melar Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of YHN Acquisition and Melar Acquisition.

Diversification Opportunities for YHN Acquisition and Melar Acquisition

-0.02

Correlation Coefficient

YHN Acquisition  Melar Acquisition

Good diversification

The 3 months correlation between YHN and Melar is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding YHN Acquisition I and Melar Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melar Acquisition Corp and YHN Acquisition 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 YHN Acquisition I are associated (or correlated) with Melar Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melar Acquisition Corp has no effect on the direction of YHN Acquisition i.e., YHN Acquisition and Melar Acquisition go up and down completely randomly.

Pair Corralation between YHN Acquisition and Melar Acquisition

Assuming the 90 days horizon YHN Acquisition I is expected to generate 0.63 times more return on investment than Melar Acquisition. However, YHN Acquisition I is 1.58 times less risky than Melar Acquisition. It trades about 0.02 of its potential returns per unit of risk. Melar Acquisition Corp is currently generating about -0.04 per unit of risk. If you would invest  12.00  in YHN Acquisition I on October 1, 2024 and sell it today you would earn a total of  0.00  from holding YHN Acquisition I or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.15%
Values	Daily Returns

YHN Acquisition I  vs.  Melar Acquisition Corp

YHN Acquisition I

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days YHN Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively inconsistent basic indicators, YHN Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Melar Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Melar Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent forward indicators, Melar Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with YHN Acquisition and Melar Acquisition

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

The idea behind YHN Acquisition I and Melar 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 Global Correlations module to find global opportunities by holding instruments from different markets.