Correlation Between Yulon and Chinese Maritime
Can any of the company-specific risk be diversified away by investing in both Yulon and Chinese Maritime 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 Yulon and Chinese Maritime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Motor Co and Chinese Maritime Transport, you can compare the effects of market volatilities on Yulon and Chinese Maritime 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 Yulon with a short position of Chinese Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Chinese Maritime.
Diversification Opportunities for Yulon and Chinese Maritime
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yulon and Chinese is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Chinese Maritime Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Maritime Tra and Yulon 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 Yulon Motor Co are associated (or correlated) with Chinese Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Maritime Tra has no effect on the direction of Yulon i.e., Yulon and Chinese Maritime go up and down completely randomly.
Pair Corralation between Yulon and Chinese Maritime
Assuming the 90 days trading horizon Yulon Motor Co is expected to under-perform the Chinese Maritime. In addition to that, Yulon is 1.33 times more volatile than Chinese Maritime Transport. It trades about -0.08 of its total potential returns per unit of risk. Chinese Maritime Transport is currently generating about 0.01 per unit of volatility. If you would invest 4,305 in Chinese Maritime Transport on September 2, 2024 and sell it today you would lose (5.00) from holding Chinese Maritime Transport or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Motor Co vs. Chinese Maritime Transport
Performance |
| Timeline |
| Yulon Motor |
| Chinese Maritime Tra |
Yulon and Chinese Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Chinese Maritime
The main advantage of trading using opposite Yulon and Chinese Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Chinese Maritime 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 Chinese Maritime will offset losses from the drop in Chinese Maritime's long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Chinese Maritime vs. BES Engineering Co | Chinese Maritime vs. Continental Holdings Corp | Chinese Maritime vs. Kee Tai Properties | Chinese Maritime vs. Hung Sheng Construction |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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