Correlation Between Young Poong and Rainbow Robotics

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

By analyzing existing cross correlation between Young Poong Precision and Rainbow Robotics, you can compare the effects of market volatilities on Young Poong and Rainbow Robotics 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 Young Poong with a short position of Rainbow Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Poong and Rainbow Robotics.

Diversification Opportunities for Young Poong and Rainbow Robotics

0.05

Correlation Coefficient

Young Poong  Rainbow Robotics

Significant diversification

The 3 months correlation between Young and Rainbow is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Young Poong Precision and Rainbow Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainbow Robotics and Young Poong 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 Young Poong Precision are associated (or correlated) with Rainbow Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainbow Robotics has no effect on the direction of Young Poong i.e., Young Poong and Rainbow Robotics go up and down completely randomly.

Pair Corralation between Young Poong and Rainbow Robotics

Assuming the 90 days trading horizon Young Poong Precision is expected to generate 3.23 times more return on investment than Rainbow Robotics. However, Young Poong is 3.23 times more volatile than Rainbow Robotics. It trades about 0.07 of its potential returns per unit of risk. Rainbow Robotics is currently generating about 0.0 per unit of risk. If you would invest  1,218,000  in Young Poong Precision on September 13, 2024 and sell it today you would earn a total of  182,000  from holding Young Poong Precision or generate 14.94% return on investment over 90 days.

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

Young Poong Precision  vs.  Rainbow Robotics

Young Poong Precision

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Young Poong Precision are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Young Poong sustained solid returns over the last few months and may actually be approaching a breakup point.

Rainbow Robotics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rainbow Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Rainbow Robotics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Young Poong and Rainbow Robotics

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

The idea behind Young Poong Precision and Rainbow Robotics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.