Correlation Between SPDR Morgan and Yunhong CTI

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

By analyzing existing cross correlation between SPDR Morgan Stanley and Yunhong CTI, you can compare the effects of market volatilities on SPDR Morgan and Yunhong CTI 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 SPDR Morgan with a short position of Yunhong CTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Morgan and Yunhong CTI.

Diversification Opportunities for SPDR Morgan and Yunhong CTI

-0.34

Correlation Coefficient

SPDR Morgan  Yunhong CTI

Very good diversification

The 3 months correlation between SPDR and Yunhong is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Morgan Stanley and Yunhong CTI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunhong CTI and SPDR Morgan 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 SPDR Morgan Stanley are associated (or correlated) with Yunhong CTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunhong CTI has no effect on the direction of SPDR Morgan i.e., SPDR Morgan and Yunhong CTI go up and down completely randomly.

Pair Corralation between SPDR Morgan and Yunhong CTI

Given the investment horizon of 90 days SPDR Morgan is expected to generate 4.82 times less return on investment than Yunhong CTI. But when comparing it to its historical volatility, SPDR Morgan Stanley is 3.6 times less risky than Yunhong CTI. It trades about 0.06 of its potential returns per unit of risk. Yunhong CTI is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Yunhong CTI on January 30, 2024 and sell it today you would earn a total of  163.00  from holding Yunhong CTI or generate 203.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.1%
Values	Daily Returns

SPDR Morgan Stanley  vs.  Yunhong CTI

SPDR Morgan Stanley

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Morgan Stanley are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, SPDR Morgan is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Yunhong CTI

Risk-Adjusted Performance

0 of 100

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR Morgan and Yunhong CTI

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

The idea behind SPDR Morgan Stanley and Yunhong CTI 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.