Correlation Between Yellow Pages and Buyer Group

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

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

Diversification Opportunities for Yellow Pages and Buyer Group

-0.34

Correlation Coefficient

Yellow Pages  Buyer Group

Very good diversification

The 3 months correlation between Yellow and Buyer is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and Buyer Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buyer Group International and Yellow Pages 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 Pages Limited are associated (or correlated) with Buyer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buyer Group International has no effect on the direction of Yellow Pages i.e., Yellow Pages and Buyer Group go up and down completely randomly.

Pair Corralation between Yellow Pages and Buyer Group

Assuming the 90 days horizon Yellow Pages Limited is expected to generate 0.11 times more return on investment than Buyer Group. However, Yellow Pages Limited is 9.21 times less risky than Buyer Group. It trades about 0.29 of its potential returns per unit of risk. Buyer Group International is currently generating about -0.08 per unit of risk. If you would invest  752.00  in Yellow Pages Limited on September 27, 2024 and sell it today you would earn a total of  38.00  from holding Yellow Pages Limited or generate 5.05% return on investment over 90 days.

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

Yellow Pages Limited  vs.  Buyer Group International

Yellow Pages Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Yellow Pages may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Buyer Group International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yellow Pages and Buyer Group

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

The idea behind Yellow Pages Limited and Buyer Group International 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.