Correlation Between Yong Concrete and Yggdrazil Group

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

By analyzing existing cross correlation between Yong Concrete PCL and Yggdrazil Group Public, you can compare the effects of market volatilities on Yong Concrete and Yggdrazil 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 Yong Concrete with a short position of Yggdrazil Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yong Concrete and Yggdrazil Group.

Diversification Opportunities for Yong Concrete and Yggdrazil Group

0.06

Correlation Coefficient

Yong Concrete  Yggdrazil Group

Significant diversification

The 3 months correlation between Yong and Yggdrazil is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Yong Concrete PCL and Yggdrazil Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yggdrazil Group Public and Yong Concrete 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 Yong Concrete PCL are associated (or correlated) with Yggdrazil Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yggdrazil Group Public has no effect on the direction of Yong Concrete i.e., Yong Concrete and Yggdrazil Group go up and down completely randomly.

Pair Corralation between Yong Concrete and Yggdrazil Group

Assuming the 90 days trading horizon Yong Concrete PCL is expected to under-perform the Yggdrazil Group. But the stock apears to be less risky and, when comparing its historical volatility, Yong Concrete PCL is 4.28 times less risky than Yggdrazil Group. The stock trades about -0.06 of its potential returns per unit of risk. The Yggdrazil Group Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  54.00  in Yggdrazil Group Public on December 22, 2024 and sell it today you would earn a total of  6.00  from holding Yggdrazil Group Public or generate 11.11% return on investment over 90 days.

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

Yong Concrete PCL  vs.  Yggdrazil Group Public

Yong Concrete PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yong Concrete PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Yong Concrete is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Yggdrazil Group Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yggdrazil Group Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Yggdrazil Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yong Concrete and Yggdrazil Group

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

The idea behind Yong Concrete PCL and Yggdrazil Group Public 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.