Correlation Between Yuexiu Transport and Jiangsu Expressway
Can any of the company-specific risk be diversified away by investing in both Yuexiu Transport and Jiangsu Expressway 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 Jiangsu Expressway 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 Jiangsu Expressway, you can compare the effects of market volatilities on Yuexiu Transport and Jiangsu Expressway 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 Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuexiu Transport and Jiangsu Expressway.
Diversification Opportunities for Yuexiu Transport and Jiangsu Expressway
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yuexiu and Jiangsu is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Jiangsu Expressway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway 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 Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Jiangsu Expressway go up and down completely randomly.
Pair Corralation between Yuexiu Transport and Jiangsu Expressway
Assuming the 90 days horizon Yuexiu Transport is expected to generate 3.42 times less return on investment than Jiangsu Expressway. But when comparing it to its historical volatility, Yuexiu Transport Infrastructure is 2.52 times less risky than Jiangsu Expressway. It trades about 0.06 of its potential returns per unit of risk. Jiangsu Expressway is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Jiangsu Expressway on August 30, 2024 and sell it today you would earn a total of 47.00 from holding Jiangsu Expressway or generate 106.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuexiu Transport Infrastructur vs. Jiangsu Expressway
Performance |
| Timeline |
| Yuexiu Transport Inf |
| Jiangsu Expressway |
Yuexiu Transport and Jiangsu Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuexiu Transport and Jiangsu Expressway
The main advantage of trading using opposite Yuexiu Transport and Jiangsu Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuexiu Transport position performs unexpectedly, Jiangsu Expressway 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 Jiangsu Expressway will offset losses from the drop in Jiangsu Expressway's long position.| Yuexiu Transport vs. Superior Plus Corp | Yuexiu Transport vs. NMI Holdings | Yuexiu Transport vs. Origin Agritech | Yuexiu Transport vs. SIVERS SEMICONDUCTORS AB |
| Jiangsu Expressway vs. SPARTAN STORES | Jiangsu Expressway vs. CeoTronics AG | Jiangsu Expressway vs. FAST RETAIL ADR | Jiangsu Expressway vs. JIAHUA STORES |
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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