Correlation Between Yulon Nissan and Hotai
Can any of the company-specific risk be diversified away by investing in both Yulon Nissan and Hotai 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 Yulon Nissan and Hotai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Nissan Motor and Hotai Motor Co, you can compare the effects of market volatilities on Yulon Nissan and Hotai 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 Yulon Nissan with a short position of Hotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Nissan and Hotai.
Diversification Opportunities for Yulon Nissan and Hotai
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Yulon and Hotai is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Nissan Motor and Hotai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Motor and Yulon Nissan 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 Yulon Nissan Motor are associated (or correlated) with Hotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Motor has no effect on the direction of Yulon Nissan i.e., Yulon Nissan and Hotai go up and down completely randomly.
Pair Corralation between Yulon Nissan and Hotai
Assuming the 90 days trading horizon Yulon Nissan Motor is expected to under-perform the Hotai. In addition to that, Yulon Nissan is 2.12 times more volatile than Hotai Motor Co. It trades about -0.56 of its total potential returns per unit of risk. Hotai Motor Co is currently generating about -0.35 per unit of volatility. If you would invest 63,800 in Hotai Motor Co on September 24, 2024 and sell it today you would lose (4,400) from holding Hotai Motor Co or give up 6.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Yulon Nissan Motor vs. Hotai Motor Co
Performance |
Timeline |
Yulon Nissan Motor |
Hotai Motor |
Yulon Nissan and Hotai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yulon Nissan and Hotai
The main advantage of trading using opposite Yulon Nissan and Hotai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Nissan position performs unexpectedly, Hotai 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 Hotai will offset losses from the drop in Hotai's long position.Yulon Nissan vs. Hotai Motor Co | Yulon Nissan vs. Yulon Motor Co | Yulon Nissan vs. Cheng Shin Rubber | Yulon Nissan vs. Formosa Chemicals Fibre |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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