Correlation Between YHN Acquisition and Direct Selling

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

Diversification Opportunities for YHN Acquisition and Direct Selling

0.68

Correlation Coefficient

YHN Acquisition  Direct Selling

Poor diversification

The 3 months correlation between YHN and Direct is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding YHN Acquisition I and Direct Selling Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Selling Acqui 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 Direct Selling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Selling Acqui has no effect on the direction of YHN Acquisition i.e., YHN Acquisition and Direct Selling go up and down completely randomly.

Pair Corralation between YHN Acquisition and Direct Selling

Assuming the 90 days horizon YHN Acquisition is expected to generate 1.25 times less return on investment than Direct Selling. In addition to that, YHN Acquisition is 3.73 times more volatile than Direct Selling Acquisition. It trades about 0.05 of its total potential returns per unit of risk. Direct Selling Acquisition is currently generating about 0.22 per unit of volatility. If you would invest  1,027  in Direct Selling Acquisition on September 18, 2024 and sell it today you would earn a total of  50.00  from holding Direct Selling Acquisition or generate 4.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	46.85%
Values	Daily Returns

YHN Acquisition I  vs.  Direct Selling Acquisition

YHN Acquisition I

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in YHN Acquisition I are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Direct Selling Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direct Selling Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Direct Selling is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with YHN Acquisition and Direct Selling

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

The idea behind YHN Acquisition I and Direct Selling Acquisition 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.