Correlation Between China Yuchai and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both China Yuchai and Lotus Technology 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 Lotus Technology 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 Lotus Technology Warrants, you can compare the effects of market volatilities on China Yuchai and Lotus Technology 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 Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Yuchai and Lotus Technology.
Diversification Opportunities for China Yuchai and Lotus Technology
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Lotus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants 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 Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of China Yuchai i.e., China Yuchai and Lotus Technology go up and down completely randomly.
Pair Corralation between China Yuchai and Lotus Technology
Considering the 90-day investment horizon China Yuchai International is expected to under-perform the Lotus Technology. But the stock apears to be less risky and, when comparing its historical volatility, China Yuchai International is 4.29 times less risky than Lotus Technology. The stock trades about -0.47 of its potential returns per unit of risk. The Lotus Technology Warrants is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Lotus Technology Warrants on August 25, 2024 and sell it today you would lose (1.00) from holding Lotus Technology Warrants or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 60.87% |
| Values | Daily Returns |
China Yuchai International vs. Lotus Technology Warrants
Performance |
| Timeline |
| China Yuchai Interna |
| Lotus Technology Warrants |
China Yuchai and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Yuchai and Lotus Technology
The main advantage of trading using opposite China Yuchai and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Yuchai position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology's long position.| China Yuchai vs. China Natural Resources | China Yuchai vs. Sonida Senior Living | China Yuchai vs. UTStarcom Holdings Corp | China Yuchai vs. Deswell Industries |
| Lotus Technology vs. F PD | Lotus Technology vs. China Yuchai International | Lotus Technology vs. SRIVARU Holding Limited | Lotus Technology vs. Canoo Holdings |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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