Correlation Between Yellow Cake and Isoenergy

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

By analyzing existing cross correlation between Yellow Cake plc and Isoenergy, you can compare the effects of market volatilities on Yellow Cake and Isoenergy 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 Yellow Cake with a short position of Isoenergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Cake and Isoenergy.

Diversification Opportunities for Yellow Cake and Isoenergy

0.11

Correlation Coefficient

Yellow Cake  Isoenergy

Average diversification

The 3 months correlation between Yellow and Isoenergy is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Cake plc and Isoenergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isoenergy and Yellow Cake 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 Yellow Cake plc are associated (or correlated) with Isoenergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isoenergy has no effect on the direction of Yellow Cake i.e., Yellow Cake and Isoenergy go up and down completely randomly.

Pair Corralation between Yellow Cake and Isoenergy

Assuming the 90 days horizon Yellow Cake plc is expected to under-perform the Isoenergy. But the otc stock apears to be less risky and, when comparing its historical volatility, Yellow Cake plc is 15.79 times less risky than Isoenergy. The otc stock trades about 0.0 of its potential returns per unit of risk. The Isoenergy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  179.00  in Isoenergy on December 29, 2024 and sell it today you would earn a total of  557.00  from holding Isoenergy or generate 311.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Yellow Cake plc  vs.  Isoenergy

Yellow Cake plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yellow Cake plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yellow Cake is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Isoenergy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Isoenergy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Isoenergy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yellow Cake and Isoenergy

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

The idea behind Yellow Cake plc and Isoenergy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.