Correlation Between Virco Manufacturing and China Yuchai
Can any of the company-specific risk be diversified away by investing in both Virco Manufacturing and China Yuchai 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 Virco Manufacturing and China Yuchai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virco Manufacturing and China Yuchai International, you can compare the effects of market volatilities on Virco Manufacturing and China Yuchai 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 Virco Manufacturing with a short position of China Yuchai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virco Manufacturing and China Yuchai.
Diversification Opportunities for Virco Manufacturing and China Yuchai
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Virco and China is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Virco Manufacturing and China Yuchai International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Yuchai Interna and Virco Manufacturing 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 Virco Manufacturing are associated (or correlated) with China Yuchai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Yuchai Interna has no effect on the direction of Virco Manufacturing i.e., Virco Manufacturing and China Yuchai go up and down completely randomly.
Pair Corralation between Virco Manufacturing and China Yuchai
Given the investment horizon of 90 days Virco Manufacturing is expected to generate 1.93 times more return on investment than China Yuchai. However, Virco Manufacturing is 1.93 times more volatile than China Yuchai International. It trades about 0.08 of its potential returns per unit of risk. China Yuchai International is currently generating about 0.07 per unit of risk. If you would invest 1,149 in Virco Manufacturing on August 24, 2024 and sell it today you would earn a total of 462.00 from holding Virco Manufacturing or generate 40.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virco Manufacturing vs. China Yuchai International
Performance |
| Timeline |
| Virco Manufacturing |
| China Yuchai Interna |
Virco Manufacturing and China Yuchai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virco Manufacturing and China Yuchai
The main advantage of trading using opposite Virco Manufacturing and China Yuchai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virco Manufacturing position performs unexpectedly, China Yuchai 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 China Yuchai will offset losses from the drop in China Yuchai's long position.| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
| China Yuchai vs. China Automotive Systems | China Yuchai vs. China Natural Resources | China Yuchai vs. Sonida Senior Living | China Yuchai vs. UTStarcom Holdings Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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