Correlation Between Yageo Corp and Thinking Electronic

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

By analyzing existing cross correlation between Yageo Corp and Thinking Electronic Industrial, you can compare the effects of market volatilities on Yageo Corp and Thinking Electronic 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 Yageo Corp with a short position of Thinking Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yageo Corp and Thinking Electronic.

Diversification Opportunities for Yageo Corp and Thinking Electronic

0.93

Correlation Coefficient

Yageo Corp  Thinking Electronic

Almost no diversification

The 3 months correlation between Yageo and Thinking is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Thinking Electronic Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinking Electronic and Yageo Corp 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 Yageo Corp are associated (or correlated) with Thinking Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinking Electronic has no effect on the direction of Yageo Corp i.e., Yageo Corp and Thinking Electronic go up and down completely randomly.

Pair Corralation between Yageo Corp and Thinking Electronic

Assuming the 90 days trading horizon Yageo Corp is expected to generate 1.66 times less return on investment than Thinking Electronic. But when comparing it to its historical volatility, Yageo Corp is 1.01 times less risky than Thinking Electronic. It trades about 0.02 of its potential returns per unit of risk. Thinking Electronic Industrial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11,900  in Thinking Electronic Industrial on September 13, 2024 and sell it today you would earn a total of  3,950  from holding Thinking Electronic Industrial or generate 33.19% return on investment over 90 days.

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

Yageo Corp  vs.  Thinking Electronic Industrial

Yageo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yageo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Thinking Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thinking Electronic Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Yageo Corp and Thinking Electronic

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

The idea behind Yageo Corp and Thinking Electronic Industrial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..