Correlation Between YAOKO and NVR

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

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

Diversification Opportunities for YAOKO and NVR

0.17

Correlation Coefficient

YAOKO  NVR

Average diversification

The 3 months correlation between YAOKO and NVR is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding YAOKO LTD and NVR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVR Inc and YAOKO 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 YAOKO LTD are associated (or correlated) with NVR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVR Inc has no effect on the direction of YAOKO i.e., YAOKO and NVR go up and down completely randomly.

Pair Corralation between YAOKO and NVR

Assuming the 90 days horizon YAOKO LTD is expected to under-perform the NVR. But the stock apears to be less risky and, when comparing its historical volatility, YAOKO LTD is 1.74 times less risky than NVR. The stock trades about -0.01 of its potential returns per unit of risk. The NVR Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  610,000  in NVR Inc on May 7, 2025 and sell it today you would earn a total of  55,000  from holding NVR Inc or generate 9.02% return on investment over 90 days.

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

YAOKO LTD  vs.  NVR Inc

YAOKO LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days YAOKO LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, YAOKO is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NVR Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVR Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NVR may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with YAOKO and NVR

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

The idea behind YAOKO LTD and NVR Inc 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.