Correlation Between Transurban and Zhejiang Expressway
Can any of the company-specific risk be diversified away by investing in both Transurban and Zhejiang Expressway 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 Transurban and Zhejiang Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transurban Group and Zhejiang Expressway Co, you can compare the effects of market volatilities on Transurban and Zhejiang Expressway 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 Transurban with a short position of Zhejiang Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transurban and Zhejiang Expressway.
Diversification Opportunities for Transurban and Zhejiang Expressway
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transurban and Zhejiang is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Transurban Group and Zhejiang Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Expressway and Transurban 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 Transurban Group are associated (or correlated) with Zhejiang Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Expressway has no effect on the direction of Transurban i.e., Transurban and Zhejiang Expressway go up and down completely randomly.
Pair Corralation between Transurban and Zhejiang Expressway
Assuming the 90 days horizon Transurban Group is expected to generate 0.9 times more return on investment than Zhejiang Expressway. However, Transurban Group is 1.12 times less risky than Zhejiang Expressway. It trades about 0.07 of its potential returns per unit of risk. Zhejiang Expressway Co is currently generating about -0.05 per unit of risk. If you would invest 779.00 in Transurban Group on August 28, 2024 and sell it today you would earn a total of 15.00 from holding Transurban Group or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transurban Group vs. Zhejiang Expressway Co
Performance |
| Timeline |
| Transurban Group |
| Zhejiang Expressway |
Transurban and Zhejiang Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transurban and Zhejiang Expressway
The main advantage of trading using opposite Transurban and Zhejiang Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transurban position performs unexpectedly, Zhejiang Expressway 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 Zhejiang Expressway will offset losses from the drop in Zhejiang Expressway's long position.| Transurban vs. COLUMBIA SPORTSWEAR | Transurban vs. American Airlines Group | Transurban vs. Nok Airlines PCL | Transurban vs. Playtech plc |
| Zhejiang Expressway vs. Apple Inc | Zhejiang Expressway vs. Apple Inc | Zhejiang Expressway vs. Apple Inc | Zhejiang Expressway vs. Apple 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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