Correlation Between China Yuchai and Nuvve Holding

Can any of the company-specific risk be diversified away by investing in both China Yuchai and Nuvve Holding 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 Nuvve Holding 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 Nuvve Holding Corp, you can compare the effects of market volatilities on China Yuchai and Nuvve Holding 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 Nuvve Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Yuchai and Nuvve Holding.

Diversification Opportunities for China Yuchai and Nuvve Holding

0.73

Correlation Coefficient

China Yuchai  Nuvve Holding

Poor diversification

The 3 months correlation between China and Nuvve is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and Nuvve Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvve Holding Corp 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 Nuvve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvve Holding Corp has no effect on the direction of China Yuchai i.e., China Yuchai and Nuvve Holding go up and down completely randomly.

Pair Corralation between China Yuchai and Nuvve Holding

Considering the 90-day investment horizon China Yuchai International is expected to generate 0.21 times more return on investment than Nuvve Holding. However, China Yuchai International is 4.78 times less risky than Nuvve Holding. It trades about 0.04 of its potential returns per unit of risk. Nuvve Holding Corp is currently generating about -0.04 per unit of risk. If you would invest  741.00  in China Yuchai International on September 26, 2024 and sell it today you would earn a total of  238.00  from holding China Yuchai International or generate 32.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

China Yuchai International  vs.  Nuvve Holding Corp

China Yuchai Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Yuchai International 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 basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nuvve Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvve Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with China Yuchai and Nuvve Holding

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

The idea behind China Yuchai International and Nuvve Holding Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..