Correlation Between YHN Acquisition and Carlyle

Can any of the company-specific risk be diversified away by investing in both YHN Acquisition and Carlyle 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 Carlyle 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 The Carlyle Group, you can compare the effects of market volatilities on YHN Acquisition and Carlyle 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 Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of YHN Acquisition and Carlyle.

Diversification Opportunities for YHN Acquisition and Carlyle

-0.12

Correlation Coefficient

YHN Acquisition  Carlyle

Good diversification

The 3 months correlation between YHN and Carlyle is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding YHN Acquisition I and The Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of YHN Acquisition i.e., YHN Acquisition and Carlyle go up and down completely randomly.

Pair Corralation between YHN Acquisition and Carlyle

Assuming the 90 days horizon YHN Acquisition I is expected to generate 1.34 times more return on investment than Carlyle. However, YHN Acquisition is 1.34 times more volatile than The Carlyle Group. It trades about 0.03 of its potential returns per unit of risk. The Carlyle Group is currently generating about 0.02 per unit of risk. If you would invest  1,010  in YHN Acquisition I on December 25, 2024 and sell it today you would earn a total of  14.00  from holding YHN Acquisition I or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.33%
Values	Daily Returns

YHN Acquisition I  vs.  The Carlyle Group

YHN Acquisition I

Risk-Adjusted Performance

Weak

Over the last 90 days YHN Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, YHN Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Carlyle Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Carlyle Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Carlyle is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with YHN Acquisition and Carlyle

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

The idea behind YHN Acquisition I and The Carlyle Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.