Correlation Between Air Transport and Yuexiu Transport

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

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

Diversification Opportunities for Air Transport and Yuexiu Transport

0.98

Correlation Coefficient

Air Transport  Yuexiu Transport

Almost no diversification

The 3 months correlation between Air and Yuexiu is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services 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 Air 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 Air Transport Services 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 Air Transport i.e., Air Transport and Yuexiu Transport go up and down completely randomly.

Pair Corralation between Air Transport and Yuexiu Transport

Given the investment horizon of 90 days Air Transport Services is expected to generate 1.11 times more return on investment than Yuexiu Transport. However, Air Transport is 1.11 times more volatile than Yuexiu Transport Infrastructure. It trades about 0.17 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.13 per unit of risk. If you would invest  1,535  in Air Transport Services on September 14, 2024 and sell it today you would earn a total of  656.50  from holding Air Transport Services or generate 42.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Air Transport Services  vs.  Yuexiu Transport Infrastructur

Air Transport Services

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Air Transport and Yuexiu Transport

The main advantage of trading using opposite Air Transport and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Air Transport Services 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..