Correlation Between Yunji and Urban Outfitters

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

By analyzing existing cross correlation between Yunji Inc and Urban Outfitters, you can compare the effects of market volatilities on Yunji and Urban Outfitters 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 Urban Outfitters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunji and Urban Outfitters.

Diversification Opportunities for Yunji and Urban Outfitters

-0.32

Correlation Coefficient

Yunji  Urban Outfitters

Very good diversification

The 3 months correlation between Yunji and Urban is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Yunji Inc and Urban Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Outfitters 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 Urban Outfitters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Outfitters has no effect on the direction of Yunji i.e., Yunji and Urban Outfitters go up and down completely randomly.

Pair Corralation between Yunji and Urban Outfitters

Allowing for the 90-day total investment horizon Yunji Inc is expected to under-perform the Urban Outfitters. In addition to that, Yunji is 1.75 times more volatile than Urban Outfitters. It trades about -0.1 of its total potential returns per unit of risk. Urban Outfitters is currently generating about 0.16 per unit of volatility. If you would invest  3,831  in Urban Outfitters on August 30, 2024 and sell it today you would earn a total of  918.00  from holding Urban Outfitters or generate 23.96% return on investment over 90 days.

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

Yunji Inc  vs.  Urban Outfitters

Yunji Inc

Risk-Adjusted Performance

1 of 100

Very 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.

Urban Outfitters

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Outfitters are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Urban Outfitters displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yunji and Urban Outfitters

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

The idea behind Yunji Inc and Urban Outfitters 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.