Correlation Between China Tontine and Yuexiu Transport

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

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

Diversification Opportunities for China Tontine and Yuexiu Transport

-1.0

Correlation Coefficient

China Tontine  Yuexiu Transport

Pay attention - limited upside

The 3 months correlation between China and Yuexiu is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding China Tontine Wines 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 China Tontine 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 China Tontine Wines 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 China Tontine i.e., China Tontine and Yuexiu Transport go up and down completely randomly.

Pair Corralation between China Tontine and Yuexiu Transport

If you would invest  58.00  in Yuexiu Transport Infrastructure on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Yuexiu Transport Infrastructure or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Strong
Accuracy	95.31%
Values	Daily Returns

China Tontine Wines  vs.  Yuexiu Transport Infrastructur

China Tontine Wines

Risk-Adjusted Performance

Very Weak

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

Yuexiu Transport Inf

Risk-Adjusted Performance

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 China Tontine and Yuexiu Transport

The main advantage of trading using opposite China Tontine and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Tontine 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 China Tontine Wines 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.