Correlation Between China Yuchai and Leisure Fund

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

Diversification Opportunities for China Yuchai and Leisure Fund

-0.73
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between China Yuchai and Leisure Fund

Considering the 90-day investment horizon China Yuchai International is expected to under-perform the Leisure Fund. In addition to that, China Yuchai is 4.21 times more volatile than Leisure Fund Class. It trades about -0.05 of its total potential returns per unit of risk. Leisure Fund Class is currently generating about 0.05 per unit of volatility. If you would invest  6,722  in Leisure Fund Class on October 22, 2024 and sell it today you would earn a total of  151.00  from holding Leisure Fund Class or generate 2.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

China Yuchai International  vs.  Leisure Fund Class

 Performance 
       Timeline  
China Yuchai Interna 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
Leisure Fund Class 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Leisure Fund Class are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Leisure Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

China Yuchai and Leisure Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Yuchai and Leisure Fund

The main advantage of trading using opposite China Yuchai and Leisure Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Yuchai position performs unexpectedly, Leisure Fund 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 Leisure Fund will offset losses from the drop in Leisure Fund's long position.
The idea behind China Yuchai International and Leisure Fund Class 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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