Correlation Between FARO Technologies and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both FARO Technologies 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 FARO Technologies and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on FARO Technologies 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 FARO Technologies with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and Yuexiu Transport.
Diversification Opportunities for FARO Technologies and Yuexiu Transport
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FARO and Yuexiu is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies 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 FARO Technologies 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 FARO Technologies 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 FARO Technologies i.e., FARO Technologies and Yuexiu Transport go up and down completely randomly.
Pair Corralation between FARO Technologies and Yuexiu Transport
Given the investment horizon of 90 days FARO Technologies is expected to generate 1.7 times more return on investment than Yuexiu Transport. However, FARO Technologies is 1.7 times more volatile than Yuexiu Transport Infrastructure. It trades about 0.09 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.1 per unit of risk. If you would invest 1,804 in FARO Technologies on September 3, 2024 and sell it today you would earn a total of 853.00 from holding FARO Technologies or generate 47.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| FARO Technologies |
| Yuexiu Transport Inf |
FARO Technologies and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and Yuexiu Transport
The main advantage of trading using opposite FARO Technologies and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies 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.| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
| Yuexiu Transport vs. Zhejiang Expressway Co | Yuexiu Transport vs. Jiangsu Expressway Co | Yuexiu Transport vs. Jiangsu Expressway | Yuexiu Transport vs. Verra Mobility 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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