Correlation Between China Yuchai and Thermon Group
Can any of the company-specific risk be diversified away by investing in both China Yuchai and Thermon Group 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 Thermon Group 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 Thermon Group Holdings, you can compare the effects of market volatilities on China Yuchai and Thermon Group 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 Thermon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Yuchai and Thermon Group.
Diversification Opportunities for China Yuchai and Thermon Group
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Thermon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and Thermon Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermon Group Holdings 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 Thermon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermon Group Holdings has no effect on the direction of China Yuchai i.e., China Yuchai and Thermon Group go up and down completely randomly.
Pair Corralation between China Yuchai and Thermon Group
Considering the 90-day investment horizon China Yuchai International is expected to under-perform the Thermon Group. But the stock apears to be less risky and, when comparing its historical volatility, China Yuchai International is 1.21 times less risky than Thermon Group. The stock trades about -0.5 of its potential returns per unit of risk. The Thermon Group Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,754 in Thermon Group Holdings on August 27, 2024 and sell it today you would earn a total of 470.00 from holding Thermon Group Holdings or generate 17.07% 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. Thermon Group Holdings
Performance |
| Timeline |
| China Yuchai Interna |
| Thermon Group Holdings |
China Yuchai and Thermon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Yuchai and Thermon Group
The main advantage of trading using opposite China Yuchai and Thermon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Yuchai position performs unexpectedly, Thermon Group 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 Thermon Group will offset losses from the drop in Thermon Group'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 |
| Thermon Group vs. Hurco Companies | Thermon Group vs. Enerpac Tool Group | Thermon Group vs. Enpro Industries | Thermon Group vs. Omega Flex |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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