Correlation Between Yuexiu Transport and ENTERPRISE

Can any of the company-specific risk be diversified away by investing in both Yuexiu Transport and ENTERPRISE 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 ENTERPRISE 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 ENTERPRISE PRODUCTS OPERATING, you can compare the effects of market volatilities on Yuexiu Transport and ENTERPRISE 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 ENTERPRISE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuexiu Transport and ENTERPRISE.

Diversification Opportunities for Yuexiu Transport and ENTERPRISE

-0.4

Correlation Coefficient

Yuexiu Transport  ENTERPRISE

Very good diversification

The 3 months correlation between Yuexiu and ENTERPRISE is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and ENTERPRISE PRODUCTS OPERATING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTERPRISE PRODUCTS 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 ENTERPRISE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTERPRISE PRODUCTS has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and ENTERPRISE go up and down completely randomly.

Pair Corralation between Yuexiu Transport and ENTERPRISE

Assuming the 90 days horizon Yuexiu Transport is expected to generate 16.57 times less return on investment than ENTERPRISE. But when comparing it to its historical volatility, Yuexiu Transport Infrastructure is 24.62 times less risky than ENTERPRISE. It trades about 0.09 of its potential returns per unit of risk. ENTERPRISE PRODUCTS OPERATING is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,354  in ENTERPRISE PRODUCTS OPERATING on September 14, 2024 and sell it today you would lose (416.00) from holding ENTERPRISE PRODUCTS OPERATING or give up 5.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.62%
Values	Daily Returns

Yuexiu Transport Infrastructur  vs.  ENTERPRISE PRODUCTS OPERATING

Yuexiu Transport Inf

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuexiu Transport Infrastructure are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Yuexiu Transport reported solid returns over the last few months and may actually be approaching a breakup point.

ENTERPRISE PRODUCTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENTERPRISE PRODUCTS OPERATING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for ENTERPRISE PRODUCTS OPERATING investors.

Pair Trading with Yuexiu Transport and ENTERPRISE

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

The idea behind Yuexiu Transport Infrastructure and ENTERPRISE PRODUCTS OPERATING 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.