Correlation Between China Yuchai and Zapp Electric
Can any of the company-specific risk be diversified away by investing in both China Yuchai and Zapp Electric 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 Zapp Electric 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 Zapp Electric Vehicles, you can compare the effects of market volatilities on China Yuchai and Zapp Electric 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 Zapp Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Yuchai and Zapp Electric.
Diversification Opportunities for China Yuchai and Zapp Electric
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Zapp is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and Zapp Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapp Electric Vehicles 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 Zapp Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapp Electric Vehicles has no effect on the direction of China Yuchai i.e., China Yuchai and Zapp Electric go up and down completely randomly.
Pair Corralation between China Yuchai and Zapp Electric
Considering the 90-day investment horizon China Yuchai is expected to generate 11.09 times less return on investment than Zapp Electric. But when comparing it to its historical volatility, China Yuchai International is 10.97 times less risky than Zapp Electric. It trades about 0.06 of its potential returns per unit of risk. Zapp Electric Vehicles is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Zapp Electric Vehicles on September 3, 2024 and sell it today you would lose (0.09) from holding Zapp Electric Vehicles or give up 9.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Yuchai International vs. Zapp Electric Vehicles
Performance |
| Timeline |
| China Yuchai Interna |
| Zapp Electric Vehicles |
China Yuchai and Zapp Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Yuchai and Zapp Electric
The main advantage of trading using opposite China Yuchai and Zapp Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Yuchai position performs unexpectedly, Zapp Electric 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 Zapp Electric will offset losses from the drop in Zapp Electric'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 |
| Zapp Electric vs. Ford Motor | Zapp Electric vs. Ford Motor | Zapp Electric vs. F PD | Zapp Electric vs. China Yuchai International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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