Correlation Between Sonos and YHN Acquisition

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

By analyzing existing cross correlation between Sonos Inc and YHN Acquisition I, you can compare the effects of market volatilities on Sonos and YHN Acquisition 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 Sonos with a short position of YHN Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and YHN Acquisition.

Diversification Opportunities for Sonos and YHN Acquisition

-0.13

Correlation Coefficient

Sonos  YHN Acquisition

Good diversification

The 3 months correlation between Sonos and YHN is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and YHN Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YHN Acquisition I and Sonos 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 Sonos Inc are associated (or correlated) with YHN Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YHN Acquisition I has no effect on the direction of Sonos i.e., Sonos and YHN Acquisition go up and down completely randomly.

Pair Corralation between Sonos and YHN Acquisition

Given the investment horizon of 90 days Sonos Inc is expected to generate 0.44 times more return on investment than YHN Acquisition. However, Sonos Inc is 2.26 times less risky than YHN Acquisition. It trades about 0.29 of its potential returns per unit of risk. YHN Acquisition I is currently generating about 0.03 per unit of risk. If you would invest  1,263  in Sonos Inc on September 17, 2024 and sell it today you would earn a total of  194.00  from holding Sonos Inc or generate 15.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Sonos Inc  vs.  YHN Acquisition I

Sonos Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Sonos displayed solid returns over the last few months and may actually be approaching a breakup point.

YHN Acquisition I

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YHN Acquisition I are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, YHN Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonos and YHN Acquisition

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

The idea behind Sonos Inc and YHN Acquisition I 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.