Correlation Between Energy Focu and China Yuchai
Can any of the company-specific risk be diversified away by investing in both Energy Focu and China Yuchai 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 Energy Focu and China Yuchai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Focu and China Yuchai International, you can compare the effects of market volatilities on Energy Focu and China Yuchai 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 Energy Focu with a short position of China Yuchai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Focu and China Yuchai.
Diversification Opportunities for Energy Focu and China Yuchai
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and China is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Energy Focu and China Yuchai International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Yuchai Interna and Energy Focu 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 Energy Focu are associated (or correlated) with China Yuchai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Yuchai Interna has no effect on the direction of Energy Focu i.e., Energy Focu and China Yuchai go up and down completely randomly.
Pair Corralation between Energy Focu and China Yuchai
Given the investment horizon of 90 days Energy Focu is expected to under-perform the China Yuchai. In addition to that, Energy Focu is 2.54 times more volatile than China Yuchai International. It trades about -0.03 of its total potential returns per unit of risk. China Yuchai International is currently generating about 0.05 per unit of volatility. If you would invest 825.00 in China Yuchai International on August 27, 2024 and sell it today you would earn a total of 128.00 from holding China Yuchai International or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Focu vs. China Yuchai International
Performance |
| Timeline |
| Energy Focu |
| China Yuchai Interna |
Energy Focu and China Yuchai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Focu and China Yuchai
The main advantage of trading using opposite Energy Focu and China Yuchai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Focu position performs unexpectedly, China Yuchai 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 China Yuchai will offset losses from the drop in China Yuchai's long position.| Energy Focu vs. Petros Pharmaceuticals | Energy Focu vs. Pioneer Power Solutions | Energy Focu vs. Ensysce Biosciences |
| China Yuchai vs. China Automotive Systems | China Yuchai vs. China Natural Resources | China Yuchai vs. Sonida Senior Living | China Yuchai vs. UTStarcom Holdings Corp |
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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