Correlation Between YY and Hello

Can any of the company-specific risk be diversified away by investing in both YY and Hello 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 Hello 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 Hello Group, you can compare the effects of market volatilities on YY and Hello 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 Hello. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Hello.

Diversification Opportunities for YY and Hello

0.48

Correlation Coefficient

YY  Hello

Very weak diversification

The 3 months correlation between YY and Hello is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class and Hello Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hello Group 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 Hello. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hello Group has no effect on the direction of YY i.e., YY and Hello go up and down completely randomly.

Pair Corralation between YY and Hello

Allowing for the 90-day total investment horizon YY Inc Class is expected to generate 1.13 times more return on investment than Hello. However, YY is 1.13 times more volatile than Hello Group. It trades about 0.02 of its potential returns per unit of risk. Hello Group is currently generating about -0.08 per unit of risk. If you would invest  4,223  in YY Inc Class on December 27, 2024 and sell it today you would earn a total of  58.00  from holding YY Inc Class or generate 1.37% return on investment over 90 days.

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

YY Inc Class  vs.  Hello Group

YY Inc Class

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YY Inc Class are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, YY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hello Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hello Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with YY and Hello

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

The idea behind YY Inc Class and Hello Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.