Correlation Between Yura Tech and RFTech

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

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

Diversification Opportunities for Yura Tech and RFTech

0.13

Correlation Coefficient

Yura Tech  RFTech

Average diversification

The 3 months correlation between Yura and RFTech is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Yura Tech Co and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech and Yura 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 Yura Tech Co are associated (or correlated) with RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of Yura Tech i.e., Yura Tech and RFTech go up and down completely randomly.

Pair Corralation between Yura Tech and RFTech

Assuming the 90 days trading horizon Yura Tech Co is expected to under-perform the RFTech. But the stock apears to be less risky and, when comparing its historical volatility, Yura Tech Co is 1.54 times less risky than RFTech. The stock trades about -0.05 of its potential returns per unit of risk. The RFTech Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  343,000  in RFTech Co on September 3, 2024 and sell it today you would earn a total of  0.00  from holding RFTech Co or generate 0.0% return on investment over 90 days.

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

Yura Tech Co  vs.  RFTech Co

Yura Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

RFTech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yura Tech and RFTech

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

The idea behind Yura Tech Co and RFTech Co 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.