Correlation Between China Yuchai and Xtrackers Municipal

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

Diversification Opportunities for China Yuchai and Xtrackers Municipal

-0.14

Correlation Coefficient

China Yuchai  Xtrackers Municipal

Good diversification

The 3 months correlation between China and Xtrackers is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and Xtrackers Municipal Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Municipal 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 Xtrackers Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Municipal has no effect on the direction of China Yuchai i.e., China Yuchai and Xtrackers Municipal go up and down completely randomly.

Pair Corralation between China Yuchai and Xtrackers Municipal

Considering the 90-day investment horizon China Yuchai International is expected to generate 6.65 times more return on investment than Xtrackers Municipal. However, China Yuchai is 6.65 times more volatile than Xtrackers Municipal Infrastructure. It trades about 0.08 of its potential returns per unit of risk. Xtrackers Municipal Infrastructure is currently generating about -0.21 per unit of risk. If you would invest  938.00  in China Yuchai International on September 25, 2024 and sell it today you would earn a total of  41.00  from holding China Yuchai International or generate 4.37% return on investment over 90 days.

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

China Yuchai International  vs.  Xtrackers Municipal Infrastruc

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.

Xtrackers Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers Municipal Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Xtrackers Municipal is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with China Yuchai and Xtrackers Municipal

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

The idea behind China Yuchai International and Xtrackers Municipal 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.