Correlation Between Summit Materials and YanGuFang International
Can any of the company-specific risk be diversified away by investing in both Summit Materials and YanGuFang International 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 Summit Materials and YanGuFang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and YanGuFang International Group, you can compare the effects of market volatilities on Summit Materials and YanGuFang International 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 Summit Materials with a short position of YanGuFang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and YanGuFang International.
Diversification Opportunities for Summit Materials and YanGuFang International
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summit and YanGuFang is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and YanGuFang International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YanGuFang International and Summit Materials 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 Summit Materials are associated (or correlated) with YanGuFang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YanGuFang International has no effect on the direction of Summit Materials i.e., Summit Materials and YanGuFang International go up and down completely randomly.
Pair Corralation between Summit Materials and YanGuFang International
Considering the 90-day investment horizon Summit Materials is expected to generate 0.22 times more return on investment than YanGuFang International. However, Summit Materials is 4.48 times less risky than YanGuFang International. It trades about 0.07 of its potential returns per unit of risk. YanGuFang International Group is currently generating about -0.12 per unit of risk. If you would invest 2,902 in Summit Materials on September 14, 2024 and sell it today you would earn a total of 2,179 from holding Summit Materials or generate 75.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 58.79% |
| Values | Daily Returns |
Summit Materials vs. YanGuFang International Group
Performance |
| Timeline |
| Summit Materials |
| YanGuFang International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Summit Materials and YanGuFang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and YanGuFang International
The main advantage of trading using opposite Summit Materials and YanGuFang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, YanGuFang International 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 YanGuFang International will offset losses from the drop in YanGuFang International's long position.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| YanGuFang International vs. Harmony Gold Mining | YanGuFang International vs. Emerson Electric | YanGuFang International vs. Tritent International Agriculture | YanGuFang International vs. Summit Materials |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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