Correlation Between Yulon Nissan and Global PMX
Can any of the company-specific risk be diversified away by investing in both Yulon Nissan and Global PMX 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 Global PMX 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 Global PMX Co, you can compare the effects of market volatilities on Yulon Nissan and Global PMX 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 Global PMX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Nissan and Global PMX.
Diversification Opportunities for Yulon Nissan and Global PMX
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yulon and Global is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Nissan Motor and Global PMX Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global PMX 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 Global PMX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global PMX has no effect on the direction of Yulon Nissan i.e., Yulon Nissan and Global PMX go up and down completely randomly.
Pair Corralation between Yulon Nissan and Global PMX
Assuming the 90 days trading horizon Yulon Nissan Motor is expected to under-perform the Global PMX. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Nissan Motor is 1.35 times less risky than Global PMX. The stock trades about -0.27 of its potential returns per unit of risk. The Global PMX Co is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 13,750 in Global PMX Co on September 24, 2024 and sell it today you would lose (3,000) from holding Global PMX Co or give up 21.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Yulon Nissan Motor vs. Global PMX Co
Performance |
Timeline |
Yulon Nissan Motor |
Global PMX |
Yulon Nissan and Global PMX Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yulon Nissan and Global PMX
The main advantage of trading using opposite Yulon Nissan and Global PMX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Nissan position performs unexpectedly, Global PMX 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 Global PMX will offset losses from the drop in Global PMX'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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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