Correlation Between Yuexiu Transport and Zhejiang Expressway
Can any of the company-specific risk be diversified away by investing in both Yuexiu Transport and Zhejiang 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 Zhejiang 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 Zhejiang Expressway Co, you can compare the effects of market volatilities on Yuexiu Transport and Zhejiang 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 Zhejiang Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuexiu Transport and Zhejiang Expressway.
Diversification Opportunities for Yuexiu Transport and Zhejiang Expressway
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yuexiu and Zhejiang is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Zhejiang Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang 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 Zhejiang Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Expressway has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Zhejiang Expressway go up and down completely randomly.
Pair Corralation between Yuexiu Transport and Zhejiang Expressway
Assuming the 90 days horizon Yuexiu Transport is expected to generate 1.79 times less return on investment than Zhejiang Expressway. But when comparing it to its historical volatility, Yuexiu Transport Infrastructure is 3.51 times less risky than Zhejiang Expressway. It trades about 0.1 of its potential returns per unit of risk. Zhejiang Expressway Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 60.00 in Zhejiang Expressway Co on November 2, 2024 and sell it today you would earn a total of 5.00 from holding Zhejiang Expressway Co or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.73% |
| Values | Daily Returns |
Yuexiu Transport Infrastructur vs. Zhejiang Expressway Co
Performance |
| Timeline |
| Yuexiu Transport Inf |
| Zhejiang Expressway |
Yuexiu Transport and Zhejiang Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuexiu Transport and Zhejiang Expressway
The main advantage of trading using opposite Yuexiu Transport and Zhejiang Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuexiu Transport position performs unexpectedly, Zhejiang 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 Zhejiang Expressway will offset losses from the drop in Zhejiang Expressway's long position.| Yuexiu Transport vs. Zhejiang Expressway Co | Yuexiu Transport vs. Jiangsu Expressway Co | Yuexiu Transport vs. Jiangsu Expressway | Yuexiu Transport vs. Verra Mobility Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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