Correlation Between Yeou Yih and Hai Kwang

Can any of the company-specific risk be diversified away by investing in both Yeou Yih and Hai Kwang 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 Yeou Yih and Hai Kwang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yeou Yih Steel and Hai Kwang Enterprise, you can compare the effects of market volatilities on Yeou Yih and Hai Kwang 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 Yeou Yih with a short position of Hai Kwang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yeou Yih and Hai Kwang.

Diversification Opportunities for Yeou Yih and Hai Kwang

0.68

Correlation Coefficient

Yeou Yih  Hai Kwang

Poor diversification

The 3 months correlation between Yeou and Hai is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Yeou Yih Steel and Hai Kwang Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hai Kwang Enterprise and Yeou Yih 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 Yeou Yih Steel are associated (or correlated) with Hai Kwang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hai Kwang Enterprise has no effect on the direction of Yeou Yih i.e., Yeou Yih and Hai Kwang go up and down completely randomly.

Pair Corralation between Yeou Yih and Hai Kwang

Assuming the 90 days trading horizon Yeou Yih Steel is expected to generate 0.42 times more return on investment than Hai Kwang. However, Yeou Yih Steel is 2.39 times less risky than Hai Kwang. It trades about -0.17 of its potential returns per unit of risk. Hai Kwang Enterprise is currently generating about -0.28 per unit of risk. If you would invest  1,565  in Yeou Yih Steel on September 26, 2024 and sell it today you would lose (75.00) from holding Yeou Yih Steel or give up 4.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Yeou Yih Steel  vs.  Hai Kwang Enterprise

Yeou Yih Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hai Kwang Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hai Kwang Enterprise 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 Yeou Yih and Hai Kwang

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

The idea behind Yeou Yih Steel and Hai Kwang Enterprise 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.