Correlation Between China Yuchai and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both China Yuchai and Parker Hannifin 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 Parker Hannifin 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 Parker Hannifin, you can compare the effects of market volatilities on China Yuchai and Parker Hannifin 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 Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Yuchai and Parker Hannifin.
Diversification Opportunities for China Yuchai and Parker Hannifin
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Parker is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin 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 Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of China Yuchai i.e., China Yuchai and Parker Hannifin go up and down completely randomly.
Pair Corralation between China Yuchai and Parker Hannifin
Considering the 90-day investment horizon China Yuchai International is expected to under-perform the Parker Hannifin. In addition to that, China Yuchai is 1.01 times more volatile than Parker Hannifin. It trades about -0.51 of its total potential returns per unit of risk. Parker Hannifin is currently generating about 0.29 per unit of volatility. If you would invest 62,027 in Parker Hannifin on August 26, 2024 and sell it today you would earn a total of 8,660 from holding Parker Hannifin or generate 13.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Yuchai International vs. Parker Hannifin
Performance |
| Timeline |
| China Yuchai Interna |
| Parker Hannifin |
China Yuchai and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Yuchai and Parker Hannifin
The main advantage of trading using opposite China Yuchai and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Yuchai position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin'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 |
| Parker Hannifin vs. Aquagold International | Parker Hannifin vs. Morningstar Unconstrained Allocation | Parker Hannifin vs. High Yield Municipal Fund | Parker Hannifin vs. Thrivent High Yield |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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