Correlation Between Sun Country and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both Sun Country 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 Sun Country and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Country Airlines and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on Sun Country 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 Sun Country with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Yuexiu Transport.
Diversification Opportunities for Sun Country and Yuexiu Transport
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sun and Yuexiu is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines 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 Sun Country 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 Sun Country Airlines 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 Sun Country i.e., Sun Country and Yuexiu Transport go up and down completely randomly.
Pair Corralation between Sun Country and Yuexiu Transport
Given the investment horizon of 90 days Sun Country is expected to generate 2.67 times less return on investment than Yuexiu Transport. But when comparing it to its historical volatility, Sun Country Airlines is 1.46 times less risky than Yuexiu Transport. It trades about 0.12 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 45.00 in Yuexiu Transport Infrastructure on August 24, 2024 and sell it today you would earn a total of 13.00 from holding Yuexiu Transport Infrastructure or generate 28.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sun Country Airlines vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| Sun Country Airlines |
| Yuexiu Transport Inf |
Sun Country and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Yuexiu Transport
The main advantage of trading using opposite Sun Country and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country 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.| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
| Yuexiu Transport vs. Verra Mobility Corp | Yuexiu Transport vs. HUMANA INC | Yuexiu Transport vs. Aquagold International | Yuexiu Transport vs. Barloworld Ltd ADR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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