Correlation Between International Paper and China Yuchai
Can any of the company-specific risk be diversified away by investing in both International Paper and China Yuchai 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 International Paper and China Yuchai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and China Yuchai International, you can compare the effects of market volatilities on International Paper and China Yuchai 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 International Paper with a short position of China Yuchai. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and China Yuchai.
Diversification Opportunities for International Paper and China Yuchai
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and China is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and China Yuchai International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Yuchai Interna and International Paper 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 International Paper are associated (or correlated) with China Yuchai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Yuchai Interna has no effect on the direction of International Paper i.e., International Paper and China Yuchai go up and down completely randomly.
Pair Corralation between International Paper and China Yuchai
Allowing for the 90-day total investment horizon International Paper is expected to generate 0.82 times more return on investment than China Yuchai. However, International Paper is 1.21 times less risky than China Yuchai. It trades about 0.13 of its potential returns per unit of risk. China Yuchai International is currently generating about 0.07 per unit of risk. If you would invest 4,434 in International Paper on August 24, 2024 and sell it today you would earn a total of 1,484 from holding International Paper or generate 33.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Paper vs. China Yuchai International
Performance |
| Timeline |
| International Paper |
| China Yuchai Interna |
International Paper and China Yuchai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Paper and China Yuchai
The main advantage of trading using opposite International Paper and China Yuchai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, China Yuchai 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 China Yuchai will offset losses from the drop in China Yuchai's long position.| International Paper vs. Sealed Air | International Paper vs. Avery Dennison Corp | International Paper vs. Sonoco Products | International Paper vs. Ball Corporation |
| China Yuchai vs. China Automotive Systems | China Yuchai vs. China Natural Resources | China Yuchai vs. Sonida Senior Living | China Yuchai vs. UTStarcom Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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