Correlation Between KAUFMAN ET and Yuexiu Transport

Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET 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 KAUFMAN ET and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KAUFMAN ET BROAD and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on KAUFMAN ET 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 KAUFMAN ET with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Yuexiu Transport.

Diversification Opportunities for KAUFMAN ET and Yuexiu Transport

0.21

Correlation Coefficient

KAUFMAN ET  Yuexiu Transport

Modest diversification

The 3 months correlation between KAUFMAN and Yuexiu is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD 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 KAUFMAN ET 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 KAUFMAN ET BROAD 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 KAUFMAN ET i.e., KAUFMAN ET and Yuexiu Transport go up and down completely randomly.

Pair Corralation between KAUFMAN ET and Yuexiu Transport

Assuming the 90 days trading horizon KAUFMAN ET is expected to generate 2.56 times less return on investment than Yuexiu Transport. But when comparing it to its historical volatility, KAUFMAN ET BROAD is 1.97 times less risky than Yuexiu Transport. It trades about 0.04 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Yuexiu Transport Infrastructure on February 12, 2024 and sell it today you would earn a total of  23.00  from holding Yuexiu Transport Infrastructure or generate 95.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

KAUFMAN ET BROAD  vs.  Yuexiu Transport Infrastructur

KAUFMAN ET BROAD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KAUFMAN ET BROAD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, KAUFMAN ET may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Yuexiu Transport Inf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yuexiu Transport Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yuexiu Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KAUFMAN ET and Yuexiu Transport

The main advantage of trading using opposite KAUFMAN ET and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET 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.

The idea behind KAUFMAN ET BROAD and Yuexiu Transport Infrastructure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.