Correlation Between YY and Lumen Technologies

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

By analyzing existing cross correlation between YY Inc Class and Lumen Technologies, you can compare the effects of market volatilities on YY and Lumen Technologies 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 YY with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Lumen Technologies.

Diversification Opportunities for YY and Lumen Technologies

-0.42

Correlation Coefficient

YY  Lumen Technologies

Very good diversification

The 3 months correlation between YY and Lumen is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and YY 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 YY Inc Class are associated (or correlated) with Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of YY i.e., YY and Lumen Technologies go up and down completely randomly.

Pair Corralation between YY and Lumen Technologies

Allowing for the 90-day total investment horizon YY is expected to generate 4.44 times less return on investment than Lumen Technologies. But when comparing it to its historical volatility, YY Inc Class is 2.85 times less risky than Lumen Technologies. It trades about 0.02 of its potential returns per unit of risk. Lumen Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  559.00  in Lumen Technologies on October 7, 2024 and sell it today you would earn a total of  7.00  from holding Lumen Technologies or generate 1.25% return on investment over 90 days.

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

YY Inc Class  vs.  Lumen Technologies

YY Inc Class

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in YY Inc Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, YY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lumen Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Lumen Technologies is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with YY and Lumen Technologies

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

The idea behind YY Inc Class and Lumen Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..