Correlation Between China Yuchai and Leisure Fund

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

-0.92

Correlation Coefficient

China Yuchai  Leisure Fund

Pay attention - limited upside

The 3 months correlation between China and Leisure is -0.92. 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 2.08 times more volatile than Leisure Fund Class. It trades about -0.17 of its total potential returns per unit of risk. Leisure Fund Class is currently generating about -0.19 per unit of volatility. If you would invest  8,622  in Leisure Fund Class on September 22, 2024 and sell it today you would lose (311.00) from holding Leisure Fund Class or give up 3.61% of portfolio value over 90 days.

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

China Yuchai International  vs.  Leisure Fund Class

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.

Leisure Fund Class

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leisure Fund Class are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Leisure Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.