Correlation Between China Yuchai and IDEX

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

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

Diversification Opportunities for China Yuchai and IDEX

-0.56

Correlation Coefficient

China Yuchai  IDEX

Excellent diversification

The 3 months correlation between China and IDEX is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX and China Yuchai 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 Yuchai International are associated (or correlated) with IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of China Yuchai i.e., China Yuchai and IDEX go up and down completely randomly.

Pair Corralation between China Yuchai and IDEX

Considering the 90-day investment horizon China Yuchai International is expected to generate 3.62 times more return on investment than IDEX. However, China Yuchai is 3.62 times more volatile than IDEX Corporation. It trades about 0.25 of its potential returns per unit of risk. IDEX Corporation is currently generating about -0.15 per unit of risk. If you would invest  929.00  in China Yuchai International on November 28, 2024 and sell it today you would earn a total of  1,132  from holding China Yuchai International or generate 121.85% return on investment over 90 days.

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

China Yuchai International  vs.  IDEX Corp.

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 19 (%) 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.

IDEX

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDEX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with China Yuchai and IDEX

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

The idea behind China Yuchai International and IDEX Corporation 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.