Correlation Between China Yuchai and IPower
Can any of the company-specific risk be diversified away by investing in both China Yuchai and IPower 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 IPower 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 iPower Inc, you can compare the effects of market volatilities on China Yuchai and IPower 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 IPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Yuchai and IPower.
Diversification Opportunities for China Yuchai and IPower
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and IPower is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and iPower Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPower Inc 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 IPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPower Inc has no effect on the direction of China Yuchai i.e., China Yuchai and IPower go up and down completely randomly.
Pair Corralation between China Yuchai and IPower
Considering the 90-day investment horizon China Yuchai International is expected to generate 0.2 times more return on investment than IPower. However, China Yuchai International is 5.03 times less risky than IPower. It trades about -0.5 of its potential returns per unit of risk. iPower Inc is currently generating about -0.29 per unit of risk. If you would invest 1,180 in China Yuchai International on August 27, 2024 and sell it today you would lose (242.00) from holding China Yuchai International or give up 20.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Yuchai International vs. iPower Inc
Performance |
| Timeline |
| China Yuchai Interna |
| iPower Inc |
China Yuchai and IPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Yuchai and IPower
The main advantage of trading using opposite China Yuchai and IPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Yuchai position performs unexpectedly, IPower 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 IPower will offset losses from the drop in IPower'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 |
| IPower vs. Hour Loop | IPower vs. Qurate Retail Series | IPower vs. MOGU Inc | IPower vs. Meiwu Technology 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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