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 Co, 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
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yuexiu and Jiangsu is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Jiangsu Expressway Co 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 Infrastructure is expected to generate 1.99 times more return on investment than Jiangsu Expressway. However, Yuexiu Transport is 1.99 times more volatile than Jiangsu Expressway Co. It trades about 0.22 of its potential returns per unit of risk. Jiangsu Expressway Co is currently generating about -0.06 per unit of risk. If you would invest 45.00 in Yuexiu Transport Infrastructure on August 29, 2024 and sell it today you would earn a total of 13.00 from holding Yuexiu Transport Infrastructure or generate 28.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuexiu Transport Infrastructur vs. Jiangsu Expressway Co
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. Verra Mobility Corp | Yuexiu Transport vs. HUMANA INC | Yuexiu Transport vs. Aquagold International | Yuexiu Transport vs. Barloworld Ltd ADR |
| Jiangsu Expressway vs. Verra Mobility Corp | Jiangsu Expressway vs. HUMANA INC | Jiangsu Expressway vs. Aquagold International | Jiangsu Expressway vs. Barloworld Ltd ADR |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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