Correlation Between Yuexiu Transport and Transport International

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

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

Diversification Opportunities for Yuexiu Transport and Transport International

-0.19

Correlation Coefficient

Yuexiu Transport  Transport International

Good diversification

The 3 months correlation between Yuexiu and Transport is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Transport International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport International and Yuexiu Transport 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 Yuexiu Transport Infrastructure are associated (or correlated) with Transport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport International has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Transport International go up and down completely randomly.

Pair Corralation between Yuexiu Transport and Transport International

Assuming the 90 days horizon Yuexiu Transport is expected to generate 1.15 times less return on investment than Transport International. But when comparing it to its historical volatility, Yuexiu Transport Infrastructure is 1.76 times less risky than Transport International. It trades about 0.18 of its potential returns per unit of risk. Transport International Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  103.00  in Transport International Holdings on February 13, 2024 and sell it today you would earn a total of  5.00  from holding Transport International Holdings or generate 4.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Yuexiu Transport Infrastructur  vs.  Transport International Holdin

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.

Transport International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transport International Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Transport International may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Yuexiu Transport and Transport International

The main advantage of trading using opposite Yuexiu Transport and Transport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuexiu Transport position performs unexpectedly, Transport 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 Transport International will offset losses from the drop in Transport International's long position.

The idea behind Yuexiu Transport Infrastructure and Transport International Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.