Correlation Between Shenzhen Investment and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both Shenzhen Investment 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 Shenzhen Investment and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenzhen Investment Bay and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on Shenzhen Investment 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 Shenzhen Investment with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Investment and Yuexiu Transport.
Diversification Opportunities for Shenzhen Investment and Yuexiu Transport
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Yuexiu is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Investment Bay 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 Shenzhen Investment 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 Shenzhen Investment Bay 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 Shenzhen Investment i.e., Shenzhen Investment and Yuexiu Transport go up and down completely randomly.
Pair Corralation between Shenzhen Investment and Yuexiu Transport
Assuming the 90 days horizon Shenzhen Investment Bay is expected to generate 3.24 times more return on investment than Yuexiu Transport. However, Shenzhen Investment is 3.24 times more volatile than Yuexiu Transport Infrastructure. It trades about 0.07 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.09 per unit of risk. If you would invest 191.00 in Shenzhen Investment Bay on September 1, 2024 and sell it today you would earn a total of 71.00 from holding Shenzhen Investment Bay or generate 37.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Shenzhen Investment Bay vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| Shenzhen Investment Bay |
| Yuexiu Transport Inf |
Shenzhen Investment and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Investment and Yuexiu Transport
The main advantage of trading using opposite Shenzhen Investment and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Investment 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.| Shenzhen Investment vs. Jiangsu Expressway Co | Shenzhen Investment vs. Jiangsu Expressway | Shenzhen Investment vs. Zhejiang Expressway Co | Shenzhen Investment vs. Yuexiu Transport Infrastructure |
| Yuexiu Transport vs. Verra Mobility Corp | Yuexiu Transport vs. HUMANA INC | Yuexiu Transport vs. SCOR PK | Yuexiu Transport vs. Aquagold International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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