Correlation Between FUYO GENERAL and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both FUYO GENERAL 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 FUYO GENERAL and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUYO GENERAL LEASE and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on FUYO GENERAL 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 FUYO GENERAL with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUYO GENERAL and Yuexiu Transport.
Diversification Opportunities for FUYO GENERAL and Yuexiu Transport
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FUYO and Yuexiu is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE 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 FUYO GENERAL 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 FUYO GENERAL LEASE 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 FUYO GENERAL i.e., FUYO GENERAL and Yuexiu Transport go up and down completely randomly.
Pair Corralation between FUYO GENERAL and Yuexiu Transport
Assuming the 90 days horizon FUYO GENERAL LEASE is expected to under-perform the Yuexiu Transport. But the stock apears to be less risky and, when comparing its historical volatility, FUYO GENERAL LEASE is 2.38 times less risky than Yuexiu Transport. The stock trades about -0.02 of its potential returns per unit of risk. The Yuexiu Transport Infrastructure is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Yuexiu Transport Infrastructure on October 25, 2024 and sell it today you would earn a total of 12.00 from holding Yuexiu Transport Infrastructure or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FUYO GENERAL LEASE vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| FUYO GENERAL LEASE |
| Yuexiu Transport Inf |
FUYO GENERAL and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUYO GENERAL and Yuexiu Transport
The main advantage of trading using opposite FUYO GENERAL and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUYO GENERAL 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.| FUYO GENERAL vs. RYU Apparel | FUYO GENERAL vs. Merit Medical Systems | FUYO GENERAL vs. G III Apparel Group | FUYO GENERAL vs. Inspire Medical Systems |
| Yuexiu Transport vs. Universal Health Realty | Yuexiu Transport vs. Phibro Animal Health | Yuexiu Transport vs. CLOVER HEALTH INV | Yuexiu Transport vs. MPH Health Care |
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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