Correlation Between Yuexiu Transport and East Japan
Can any of the company-specific risk be diversified away by investing in both Yuexiu Transport and East Japan 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 East Japan 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 East Japan Railway, you can compare the effects of market volatilities on Yuexiu Transport and East Japan 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 East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuexiu Transport and East Japan.
Diversification Opportunities for Yuexiu Transport and East Japan
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Yuexiu and East is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway 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 East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and East Japan go up and down completely randomly.
Pair Corralation between Yuexiu Transport and East Japan
Assuming the 90 days horizon Yuexiu Transport Infrastructure is expected to under-perform the East Japan. In addition to that, Yuexiu Transport is 1.59 times more volatile than East Japan Railway. It trades about -0.04 of its total potential returns per unit of risk. East Japan Railway is currently generating about -0.03 per unit of volatility. If you would invest 1,720 in East Japan Railway on November 7, 2024 and sell it today you would lose (16.00) from holding East Japan Railway or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Yuexiu Transport Infrastructur vs. East Japan Railway
Performance |
| Timeline |
| Yuexiu Transport Inf |
| East Japan Railway |
Yuexiu Transport and East Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuexiu Transport and East Japan
The main advantage of trading using opposite Yuexiu Transport and East Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuexiu Transport position performs unexpectedly, East Japan 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 East Japan will offset losses from the drop in East Japan's long position.| Yuexiu Transport vs. NTT DATA | Yuexiu Transport vs. Datadog | Yuexiu Transport vs. INFORMATION SVC GRP | Yuexiu Transport vs. DATATEC LTD 2 |
| East Japan vs. COSTCO WHOLESALE CDR | East Japan vs. GOME Retail Holdings | East Japan vs. PICKN PAY STORES | East Japan vs. Hyster Yale Materials Handling |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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