Correlation Between Yuexiu Transport and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Yuexiu Transport and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Yuexiu Transport and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuexiu Transport and Summit Materials.
Diversification Opportunities for Yuexiu Transport and Summit Materials
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yuexiu and Summit is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Summit Materials go up and down completely randomly.
Pair Corralation between Yuexiu Transport and Summit Materials
Assuming the 90 days horizon Yuexiu Transport Infrastructure is expected to generate 1.54 times more return on investment than Summit Materials. However, Yuexiu Transport is 1.54 times more volatile than Summit Materials. It trades about 0.11 of its potential returns per unit of risk. Summit Materials is currently generating about 0.06 per unit of risk. If you would invest 32.00 in Yuexiu Transport Infrastructure on August 27, 2024 and sell it today you would earn a total of 26.00 from holding Yuexiu Transport Infrastructure or generate 81.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuexiu Transport Infrastructur vs. Summit Materials
Performance |
| Timeline |
| Yuexiu Transport Inf |
| Summit Materials |
Yuexiu Transport and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuexiu Transport and Summit Materials
The main advantage of trading using opposite Yuexiu Transport and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuexiu Transport position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Yuexiu Transport vs. Verra Mobility Corp | Yuexiu Transport vs. HUMANA INC | Yuexiu Transport vs. Aquagold International | Yuexiu Transport vs. Barloworld Ltd ADR |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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