Correlation Between Yunhong CTI and Goodyear Tire

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Can any of the company-specific risk be diversified away by investing in both Yunhong CTI and Goodyear Tire 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 Yunhong CTI and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yunhong CTI and Goodyear Tire Rubber, you can compare the effects of market volatilities on Yunhong CTI and Goodyear Tire 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 Yunhong CTI with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunhong CTI and Goodyear Tire.

Diversification Opportunities for Yunhong CTI and Goodyear Tire

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Yunhong and Goodyear is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Yunhong CTI and Goodyear Tire Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire Rubber and Yunhong CTI 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 Yunhong CTI are associated (or correlated) with Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire Rubber has no effect on the direction of Yunhong CTI i.e., Yunhong CTI and Goodyear Tire go up and down completely randomly.

Pair Corralation between Yunhong CTI and Goodyear Tire

Given the investment horizon of 90 days Yunhong CTI is expected to generate 1.97 times more return on investment than Goodyear Tire. However, Yunhong CTI is 1.97 times more volatile than Goodyear Tire Rubber. It trades about 0.07 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.02 per unit of risk. If you would invest  101.00  in Yunhong CTI on December 29, 2023 and sell it today you would earn a total of  142.00  from holding Yunhong CTI or generate 140.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy74.49%
ValuesDaily Returns

Yunhong CTI  vs.  Goodyear Tire Rubber

 Performance 
       Timeline  
Yunhong CTI 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Yunhong CTI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Yunhong CTI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Goodyear Tire Rubber 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Goodyear Tire Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Goodyear Tire is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Yunhong CTI and Goodyear Tire Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yunhong CTI and Goodyear Tire

The main advantage of trading using opposite Yunhong CTI and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunhong CTI position performs unexpectedly, Goodyear Tire 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 Goodyear Tire will offset losses from the drop in Goodyear Tire's long position.
The idea behind Yunhong CTI and Goodyear Tire Rubber 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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