Correlation Between Yung Zip and Phytohealth Corp

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

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

Diversification Opportunities for Yung Zip and Phytohealth Corp

0.85

Correlation Coefficient

Yung Zip  Phytohealth Corp

Very poor diversification

The 3 months correlation between Yung and Phytohealth is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Yung Zip Chemical and Phytohealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phytohealth Corp and Yung Zip 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 Yung Zip Chemical are associated (or correlated) with Phytohealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phytohealth Corp has no effect on the direction of Yung Zip i.e., Yung Zip and Phytohealth Corp go up and down completely randomly.

Pair Corralation between Yung Zip and Phytohealth Corp

Assuming the 90 days trading horizon Yung Zip Chemical is expected to under-perform the Phytohealth Corp. In addition to that, Yung Zip is 1.42 times more volatile than Phytohealth Corp. It trades about -0.25 of its total potential returns per unit of risk. Phytohealth Corp is currently generating about -0.07 per unit of volatility. If you would invest  1,790  in Phytohealth Corp on September 12, 2024 and sell it today you would lose (100.00) from holding Phytohealth Corp or give up 5.59% of portfolio value over 90 days.

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

Yung Zip Chemical  vs.  Phytohealth Corp

Yung Zip Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yung Zip Chemical 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.

Phytohealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phytohealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Phytohealth Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Yung Zip and Phytohealth Corp

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

The idea behind Yung Zip Chemical and Phytohealth Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.