Correlation Between Yuexiu Transport and Cars
Can any of the company-specific risk be diversified away by investing in both Yuexiu Transport and Cars 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 Yuexiu Transport and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yuexiu Transport Infrastructure and Cars Inc, you can compare the effects of market volatilities on Yuexiu Transport and Cars 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 Yuexiu Transport with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuexiu Transport and Cars.
Diversification Opportunities for Yuexiu Transport and Cars
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yuexiu and Cars is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Yuexiu Transport 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 Yuexiu Transport Infrastructure are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Cars go up and down completely randomly.
Pair Corralation between Yuexiu Transport and Cars
Assuming the 90 days horizon Yuexiu Transport Infrastructure is expected to generate 1.57 times more return on investment than Cars. However, Yuexiu Transport is 1.57 times more volatile than Cars Inc. It trades about 0.08 of its potential returns per unit of risk. Cars Inc is currently generating about 0.03 per unit of risk. If you would invest 13.00 in Yuexiu Transport Infrastructure on September 23, 2024 and sell it today you would earn a total of 32.00 from holding Yuexiu Transport Infrastructure or generate 246.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuexiu Transport Infrastructur vs. Cars Inc
Performance |
| Timeline |
| Yuexiu Transport Inf |
| Cars Inc |
Yuexiu Transport and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuexiu Transport and Cars
The main advantage of trading using opposite Yuexiu Transport and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuexiu Transport position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Yuexiu Transport vs. Transurban Group | Yuexiu Transport vs. Jiangsu Expressway | Yuexiu Transport vs. Zhejiang Expressway Co | Yuexiu Transport vs. Arcosa Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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