Correlation Between Comerton Corp and China Yuchai

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

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

Diversification Opportunities for Comerton Corp and China Yuchai

0.0

Correlation Coefficient

Comerton Corp  China Yuchai

Pay attention - limited upside

The 3 months correlation between Comerton and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Comerton Corp and China Yuchai International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Yuchai Interna and Comerton Corp 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 Comerton Corp are associated (or correlated) with China Yuchai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Yuchai Interna has no effect on the direction of Comerton Corp i.e., Comerton Corp and China Yuchai go up and down completely randomly.

Pair Corralation between Comerton Corp and China Yuchai

If you would invest  981.00  in China Yuchai International on December 5, 2024 and sell it today you would earn a total of  1,006  from holding China Yuchai International or generate 102.55% return on investment over 90 days.

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

Comerton Corp  vs.  China Yuchai International

Comerton Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comerton Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Comerton Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

China Yuchai Interna

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in China Yuchai International are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, China Yuchai exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comerton Corp and China Yuchai

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

The idea behind Comerton Corp and China Yuchai International 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.