Correlation Between Rio Tinto and Yue Da
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Yue Da 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 Rio Tinto and Yue Da into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto Group and Yue Da International, you can compare the effects of market volatilities on Rio Tinto and Yue Da 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 Rio Tinto with a short position of Yue Da. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Yue Da.
Diversification Opportunities for Rio Tinto and Yue Da
Very good diversification
The 3 months correlation between Rio and Yue is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto Group and Yue Da International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yue Da International and Rio Tinto 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 Rio Tinto Group are associated (or correlated) with Yue Da. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yue Da International has no effect on the direction of Rio Tinto i.e., Rio Tinto and Yue Da go up and down completely randomly.
Pair Corralation between Rio Tinto and Yue Da
Assuming the 90 days trading horizon Rio Tinto Group is expected to generate 0.31 times more return on investment than Yue Da. However, Rio Tinto Group is 3.22 times less risky than Yue Da. It trades about -0.01 of its potential returns per unit of risk. Yue Da International is currently generating about -0.01 per unit of risk. If you would invest 6,050 in Rio Tinto Group on August 28, 2024 and sell it today you would lose (50.00) from holding Rio Tinto Group or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto Group vs. Yue Da International
Performance |
| Timeline |
| Rio Tinto Group |
| Yue Da International |
Rio Tinto and Yue Da Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Yue Da
The main advantage of trading using opposite Rio Tinto and Yue Da positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Yue Da 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 Yue Da will offset losses from the drop in Yue Da's long position.| Rio Tinto vs. SALESFORCE INC CDR | Rio Tinto vs. GameStop Corp | Rio Tinto vs. CODERE ONLINE LUX | Rio Tinto vs. Penn National Gaming |
| Yue Da vs. Corporate Office Properties | Yue Da vs. 24SEVENOFFICE GROUP AB | Yue Da vs. Scientific Games | Yue Da vs. QINGCI GAMES INC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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