Correlation Between Aiptek International and Yao Sheng

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

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

Diversification Opportunities for Aiptek International and Yao Sheng

0.54

Correlation Coefficient

Aiptek International  Yao Sheng

Very weak diversification

The 3 months correlation between Aiptek and Yao is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aiptek International and Yao Sheng Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yao Sheng Electronic and Aiptek International 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 Aiptek International are associated (or correlated) with Yao Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yao Sheng Electronic has no effect on the direction of Aiptek International i.e., Aiptek International and Yao Sheng go up and down completely randomly.

Pair Corralation between Aiptek International and Yao Sheng

Assuming the 90 days trading horizon Aiptek International is expected to under-perform the Yao Sheng. But the stock apears to be less risky and, when comparing its historical volatility, Aiptek International is 1.63 times less risky than Yao Sheng. The stock trades about -0.03 of its potential returns per unit of risk. The Yao Sheng Electronic is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  12,800  in Yao Sheng Electronic on January 28, 2024 and sell it today you would earn a total of  1,900  from holding Yao Sheng Electronic or generate 14.84% return on investment over 90 days.

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

Aiptek International  vs.  Yao Sheng Electronic

Aiptek International

Risk-Adjusted Performance

10 of 100

OK

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

Yao Sheng Electronic

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Yao Sheng Electronic are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yao Sheng showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aiptek International and Yao Sheng

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

The idea behind Aiptek International and Yao Sheng Electronic 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.