Correlation Between China Yuchai and Nuscale Power

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

Diversification Opportunities for China Yuchai and Nuscale Power

-0.64

Correlation Coefficient

China Yuchai  Nuscale Power

Excellent diversification

The 3 months correlation between China and Nuscale is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding China Yuchai International and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power 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 Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of China Yuchai i.e., China Yuchai and Nuscale Power go up and down completely randomly.

Pair Corralation between China Yuchai and Nuscale Power

Considering the 90-day investment horizon China Yuchai International is expected to under-perform the Nuscale Power. In addition to that, China Yuchai is 1.06 times more volatile than Nuscale Power Corp. It trades about -0.04 of its total potential returns per unit of risk. Nuscale Power Corp is currently generating about -0.04 per unit of volatility. If you would invest  1,795  in Nuscale Power Corp on December 28, 2024 and sell it today you would lose (185.00) from holding Nuscale Power Corp or give up 10.31% of portfolio value over 90 days.

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

China Yuchai International  vs.  Nuscale Power Corp

China Yuchai Interna

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Yuchai International are ranked lower than 12 (%) 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.

Nuscale Power Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuscale Power Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, Nuscale Power may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with China Yuchai and Nuscale Power

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

The idea behind China Yuchai International and Nuscale Power 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.