Correlation Between Jiangsu Expressway and Transurban
Can any of the company-specific risk be diversified away by investing in both Jiangsu Expressway and Transurban 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 Jiangsu Expressway and Transurban into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jiangsu Expressway and Transurban Group, you can compare the effects of market volatilities on Jiangsu Expressway and Transurban 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 Jiangsu Expressway with a short position of Transurban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Expressway and Transurban.
Diversification Opportunities for Jiangsu Expressway and Transurban
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jiangsu and Transurban is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Expressway and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group and Jiangsu Expressway 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 Jiangsu Expressway are associated (or correlated) with Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Jiangsu Expressway i.e., Jiangsu Expressway and Transurban go up and down completely randomly.
Pair Corralation between Jiangsu Expressway and Transurban
Assuming the 90 days horizon Jiangsu Expressway is expected to under-perform the Transurban. But the stock apears to be less risky and, when comparing its historical volatility, Jiangsu Expressway is 1.36 times less risky than Transurban. The stock trades about -0.1 of its potential returns per unit of risk. The Transurban Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 779.00 in Transurban Group on August 28, 2024 and sell it today you would earn a total of 15.00 from holding Transurban Group or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jiangsu Expressway vs. Transurban Group
Performance |
| Timeline |
| Jiangsu Expressway |
| Transurban Group |
Jiangsu Expressway and Transurban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiangsu Expressway and Transurban
The main advantage of trading using opposite Jiangsu Expressway and Transurban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangsu Expressway position performs unexpectedly, Transurban 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 Transurban will offset losses from the drop in Transurban's long position.| Jiangsu Expressway vs. HomeToGo SE | Jiangsu Expressway vs. Taylor Morrison Home | Jiangsu Expressway vs. MI Homes | Jiangsu Expressway vs. Addus HomeCare |
| Transurban vs. COLUMBIA SPORTSWEAR | Transurban vs. American Airlines Group | Transurban vs. Nok Airlines PCL | Transurban vs. Playtech plc |
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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