Correlation Between YHN Acquisition and New Providence

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

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

Diversification Opportunities for YHN Acquisition and New Providence

0.05

Correlation Coefficient

YHN Acquisition  New Providence

Significant diversification

The 3 months correlation between YHN and New is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding YHN Acquisition I and New Providence Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Providence Acqui and YHN Acquisition 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 YHN Acquisition I are associated (or correlated) with New Providence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Providence Acqui has no effect on the direction of YHN Acquisition i.e., YHN Acquisition and New Providence go up and down completely randomly.

Pair Corralation between YHN Acquisition and New Providence

Assuming the 90 days horizon YHN Acquisition I is expected to generate 27.31 times more return on investment than New Providence. However, YHN Acquisition is 27.31 times more volatile than New Providence Acquisition. It trades about 0.09 of its potential returns per unit of risk. New Providence Acquisition is currently generating about 0.08 per unit of risk. If you would invest  13.00  in YHN Acquisition I on May 6, 2025 and sell it today you would earn a total of  2.00  from holding YHN Acquisition I or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.29%
Values	Daily Returns

YHN Acquisition I  vs.  New Providence Acquisition

YHN Acquisition I

Risk-Adjusted Performance

OK

Over the last 90 days YHN Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively inconsistent basic indicators, YHN Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

New Providence Acqui

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Providence Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, New Providence is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with YHN Acquisition and New Providence

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

The idea behind YHN Acquisition I and New Providence Acquisition 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.