Correlation Between Plastic Omnium and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and Yuexiu Transport 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 Plastic Omnium and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on Plastic Omnium and Yuexiu Transport 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 Plastic Omnium with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Yuexiu Transport.
Diversification Opportunities for Plastic Omnium and Yuexiu Transport
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Plastic and Yuexiu is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf and Plastic Omnium 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 Plastic Omnium are associated (or correlated) with Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and Yuexiu Transport go up and down completely randomly.
Pair Corralation between Plastic Omnium and Yuexiu Transport
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 1.39 times less return on investment than Yuexiu Transport. But when comparing it to its historical volatility, Plastic Omnium is 1.07 times less risky than Yuexiu Transport. It trades about 0.06 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Yuexiu Transport Infrastructure on October 14, 2024 and sell it today you would earn a total of 1.00 from holding Yuexiu Transport Infrastructure or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| Plastic Omnium |
| Yuexiu Transport Inf |
Plastic Omnium and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and Yuexiu Transport
The main advantage of trading using opposite Plastic Omnium and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, Yuexiu Transport 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 Yuexiu Transport will offset losses from the drop in Yuexiu Transport's long position.| Plastic Omnium vs. Playa Hotels Resorts | Plastic Omnium vs. USWE SPORTS AB | Plastic Omnium vs. United Utilities Group | Plastic Omnium vs. PLAYTIKA HOLDING DL 01 |
| Yuexiu Transport vs. Plastic Omnium | Yuexiu Transport vs. Tencent Music Entertainment | Yuexiu Transport vs. Heidelberg Materials AG | Yuexiu Transport vs. Martin Marietta Materials |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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