Correlation Between BAIYU Holdings and Sylvamo Corp

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

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

Diversification Opportunities for BAIYU Holdings and Sylvamo Corp

-0.78

Correlation Coefficient

BAIYU Holdings  Sylvamo Corp

Pay attention - limited upside

The 3 months correlation between BAIYU and Sylvamo is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BAIYU Holdings and Sylvamo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sylvamo Corp and BAIYU Holdings 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 BAIYU Holdings are associated (or correlated) with Sylvamo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sylvamo Corp has no effect on the direction of BAIYU Holdings i.e., BAIYU Holdings and Sylvamo Corp go up and down completely randomly.

Pair Corralation between BAIYU Holdings and Sylvamo Corp

Considering the 90-day investment horizon BAIYU Holdings is expected to under-perform the Sylvamo Corp. In addition to that, BAIYU Holdings is 3.53 times more volatile than Sylvamo Corp. It trades about -0.07 of its total potential returns per unit of risk. Sylvamo Corp is currently generating about 0.07 per unit of volatility. If you would invest  4,798  in Sylvamo Corp on September 5, 2024 and sell it today you would earn a total of  4,393  from holding Sylvamo Corp or generate 91.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.38%
Values	Daily Returns

BAIYU Holdings  vs.  Sylvamo Corp

BAIYU Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sylvamo Corp

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sylvamo Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Sylvamo Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BAIYU Holdings and Sylvamo Corp

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

The idea behind BAIYU Holdings and Sylvamo 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.