Correlation Between Yunji and Big 5

Can any of the company-specific risk be diversified away by investing in both Yunji and Big 5 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 Yunji and Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yunji Inc and Big 5 Sporting, you can compare the effects of market volatilities on Yunji and Big 5 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 Yunji with a short position of Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunji and Big 5.

Diversification Opportunities for Yunji and Big 5

0.71

Correlation Coefficient

Yunji  Big 5

Poor diversification

The 3 months correlation between Yunji and Big is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Yunji Inc and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and Yunji 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 Yunji Inc are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of Yunji i.e., Yunji and Big 5 go up and down completely randomly.

Pair Corralation between Yunji and Big 5

Allowing for the 90-day total investment horizon Yunji Inc is expected to generate 1.51 times more return on investment than Big 5. However, Yunji is 1.51 times more volatile than Big 5 Sporting. It trades about 0.02 of its potential returns per unit of risk. Big 5 Sporting is currently generating about 0.0 per unit of risk. If you would invest  179.00  in Yunji Inc on September 1, 2024 and sell it today you would lose (7.00) from holding Yunji Inc or give up 3.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Yunji Inc  vs.  Big 5 Sporting

Yunji Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yunji Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Yunji may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Big 5 Sporting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big 5 Sporting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Big 5 is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Yunji and Big 5

The main advantage of trading using opposite Yunji and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunji position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.

The idea behind Yunji Inc and Big 5 Sporting 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.