Correlation Between China Yuchai and Crane
Can any of the company-specific risk be diversified away by investing in both China Yuchai and Crane 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 China Yuchai and Crane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Yuchai International and Crane Company, you can compare the effects of market volatilities on China Yuchai and Crane 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 China Yuchai with a short position of Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Yuchai and Crane.
Diversification Opportunities for China Yuchai and Crane
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Crane is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company and China Yuchai 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 China Yuchai International are associated (or correlated) with Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of China Yuchai i.e., China Yuchai and Crane go up and down completely randomly.
Pair Corralation between China Yuchai and Crane
Considering the 90-day investment horizon China Yuchai is expected to generate 1.25 times less return on investment than Crane. In addition to that, China Yuchai is 1.48 times more volatile than Crane Company. It trades about 0.11 of its total potential returns per unit of risk. Crane Company is currently generating about 0.19 per unit of volatility. If you would invest 15,098 in Crane Company on November 3, 2024 and sell it today you would earn a total of 1,934 from holding Crane Company or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Yuchai International vs. Crane Company
Performance |
| Timeline |
| China Yuchai Interna |
| Crane Company |
China Yuchai and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Yuchai and Crane
The main advantage of trading using opposite China Yuchai and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Yuchai position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| China Yuchai vs. China Automotive Systems | China Yuchai vs. China Natural Resources | China Yuchai vs. Sonida Senior Living | China Yuchai vs. UTStarcom Holdings Corp |
| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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