Correlation Between Guangshen Railway and Trinity Industries
Can any of the company-specific risk be diversified away by investing in both Guangshen Railway and Trinity Industries 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 Guangshen Railway and Trinity Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangshen Railway and Trinity Industries, you can compare the effects of market volatilities on Guangshen Railway and Trinity Industries 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 Guangshen Railway with a short position of Trinity Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangshen Railway and Trinity Industries.
Diversification Opportunities for Guangshen Railway and Trinity Industries
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Guangshen and Trinity is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Guangshen Railway and Trinity Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Industries and Guangshen Railway 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 Guangshen Railway are associated (or correlated) with Trinity Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Industries has no effect on the direction of Guangshen Railway i.e., Guangshen Railway and Trinity Industries go up and down completely randomly.
Pair Corralation between Guangshen Railway and Trinity Industries
If you would invest 3,301 in Trinity Industries on September 5, 2024 and sell it today you would earn a total of 453.00 from holding Trinity Industries or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangshen Railway vs. Trinity Industries
Performance |
| Timeline |
| Guangshen Railway |
| Trinity Industries |
Guangshen Railway and Trinity Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangshen Railway and Trinity Industries
The main advantage of trading using opposite Guangshen Railway and Trinity Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangshen Railway position performs unexpectedly, Trinity Industries 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 Trinity Industries will offset losses from the drop in Trinity Industries' long position.| Guangshen Railway vs. Trinity Industries | Guangshen Railway vs. CSX Corporation | Guangshen Railway vs. Norfolk Southern | Guangshen Railway vs. Greenbrier Companies |
| Trinity Industries vs. LB Foster | Trinity Industries vs. Freightcar America | Trinity Industries vs. Westinghouse Air Brake | Trinity Industries vs. Norfolk Southern |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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