Correlation Between HE Equipment and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both HE Equipment and Yuexiu Transport 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 HE Equipment and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on HE Equipment and Yuexiu Transport 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 HE Equipment with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Yuexiu Transport.
Diversification Opportunities for HE Equipment and Yuexiu Transport
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEES and Yuexiu is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf and HE Equipment 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 HE Equipment Services are associated (or correlated) with Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of HE Equipment i.e., HE Equipment and Yuexiu Transport go up and down completely randomly.
Pair Corralation between HE Equipment and Yuexiu Transport
Given the investment horizon of 90 days HE Equipment is expected to generate 2.56 times less return on investment than Yuexiu Transport. But when comparing it to its historical volatility, HE Equipment Services is 1.07 times less risky than Yuexiu Transport. It trades about 0.04 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Yuexiu Transport Infrastructure on September 3, 2024 and sell it today you would earn a total of 38.00 from holding Yuexiu Transport Infrastructure or generate 190.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| HE Equipment Services |
| Yuexiu Transport Inf |
HE Equipment and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Yuexiu Transport
The main advantage of trading using opposite HE Equipment and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, Yuexiu Transport 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 Yuexiu Transport will offset losses from the drop in Yuexiu Transport's long position.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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