Correlation Between YSX Tech and Premium Catering

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

By analyzing existing cross correlation between YSX Tech Co, and Premium Catering Limited, you can compare the effects of market volatilities on YSX Tech and Premium Catering 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 YSX Tech with a short position of Premium Catering. Check out your portfolio center. Please also check ongoing floating volatility patterns of YSX Tech and Premium Catering.

Diversification Opportunities for YSX Tech and Premium Catering

-0.49

Correlation Coefficient

YSX Tech  Premium Catering

Very good diversification

The 3 months correlation between YSX and Premium is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding YSX Tech Co, and Premium Catering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Catering and YSX Tech 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 YSX Tech Co, are associated (or correlated) with Premium Catering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Catering has no effect on the direction of YSX Tech i.e., YSX Tech and Premium Catering go up and down completely randomly.

Pair Corralation between YSX Tech and Premium Catering

Given the investment horizon of 90 days YSX Tech is expected to generate 6.39 times less return on investment than Premium Catering. In addition to that, YSX Tech is 2.11 times more volatile than Premium Catering Limited. It trades about 0.01 of its total potential returns per unit of risk. Premium Catering Limited is currently generating about 0.07 per unit of volatility. If you would invest  74.00  in Premium Catering Limited on December 19, 2024 and sell it today you would earn a total of  11.00  from holding Premium Catering Limited or generate 14.86% return on investment over 90 days.

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

YSX Tech Co,  vs.  Premium Catering Limited

YSX Tech Co,

Risk-Adjusted Performance

Very Weak

Over the last 90 days YSX Tech Co, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, YSX Tech is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Premium Catering

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Premium Catering Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Premium Catering exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YSX Tech and Premium Catering

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

The idea behind YSX Tech Co, and Premium Catering Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.