Correlation Between Sanyang and Yulon Nissan
Can any of the company-specific risk be diversified away by investing in both Sanyang and Yulon Nissan 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 Sanyang and Yulon Nissan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanyang Motor Co and Yulon Nissan Motor, you can compare the effects of market volatilities on Sanyang and Yulon Nissan 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 Sanyang with a short position of Yulon Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyang and Yulon Nissan.
Diversification Opportunities for Sanyang and Yulon Nissan
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sanyang and Yulon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sanyang Motor Co and Yulon Nissan Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Nissan Motor and Sanyang 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 Sanyang Motor Co are associated (or correlated) with Yulon Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Nissan Motor has no effect on the direction of Sanyang i.e., Sanyang and Yulon Nissan go up and down completely randomly.
Pair Corralation between Sanyang and Yulon Nissan
Assuming the 90 days trading horizon Sanyang Motor Co is expected to generate 0.54 times more return on investment than Yulon Nissan. However, Sanyang Motor Co is 1.85 times less risky than Yulon Nissan. It trades about -0.12 of its potential returns per unit of risk. Yulon Nissan Motor is currently generating about -0.27 per unit of risk. If you would invest 7,440 in Sanyang Motor Co on September 24, 2024 and sell it today you would lose (680.00) from holding Sanyang Motor Co or give up 9.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sanyang Motor Co vs. Yulon Nissan Motor
Performance |
Timeline |
Sanyang Motor |
Yulon Nissan Motor |
Sanyang and Yulon Nissan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sanyang and Yulon Nissan
The main advantage of trading using opposite Sanyang and Yulon Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyang position performs unexpectedly, Yulon Nissan 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 Yulon Nissan will offset losses from the drop in Yulon Nissan's long position.Sanyang vs. Yulon Motor Co | Sanyang vs. Nankang Rubber Tire | Sanyang vs. Oriental Union Chemical | Sanyang vs. Taiwan Glass Ind |
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Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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