Correlation Between Transport International and Yangzijiang Shipbuilding
Can any of the company-specific risk be diversified away by investing in both Transport International and Yangzijiang Shipbuilding 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 Transport International and Yangzijiang Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Yangzijiang Shipbuilding, you can compare the effects of market volatilities on Transport International and Yangzijiang Shipbuilding 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 Transport International with a short position of Yangzijiang Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Yangzijiang Shipbuilding.
Diversification Opportunities for Transport International and Yangzijiang Shipbuilding
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transport and Yangzijiang is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and Yangzijiang Shipbuilding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yangzijiang Shipbuilding and Transport International 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 Transport International Holdings are associated (or correlated) with Yangzijiang Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yangzijiang Shipbuilding has no effect on the direction of Transport International i.e., Transport International and Yangzijiang Shipbuilding go up and down completely randomly.
Pair Corralation between Transport International and Yangzijiang Shipbuilding
Assuming the 90 days horizon Transport International is expected to generate 178.1 times less return on investment than Yangzijiang Shipbuilding. But when comparing it to its historical volatility, Transport International Holdings is 5.75 times less risky than Yangzijiang Shipbuilding. It trades about 0.0 of its potential returns per unit of risk. Yangzijiang Shipbuilding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 181.00 in Yangzijiang Shipbuilding on September 14, 2024 and sell it today you would earn a total of 12.00 from holding Yangzijiang Shipbuilding or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Yangzijiang Shipbuilding
Performance |
| Timeline |
| Transport International |
| Yangzijiang Shipbuilding |
Transport International and Yangzijiang Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Yangzijiang Shipbuilding
The main advantage of trading using opposite Transport International and Yangzijiang Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International position performs unexpectedly, Yangzijiang Shipbuilding 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 Yangzijiang Shipbuilding will offset losses from the drop in Yangzijiang Shipbuilding's long position.| Transport International vs. CSX Corporation | Transport International vs. Westinghouse Air Brake | Transport International vs. Superior Plus Corp | Transport International vs. SIVERS SEMICONDUCTORS AB |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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