Correlation Between Ever Glory and China Yuchai

Can any of the company-specific risk be diversified away by investing in both Ever Glory and China Yuchai 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 Ever Glory and China Yuchai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ever Glory International Group and China Yuchai International, you can compare the effects of market volatilities on Ever Glory and China Yuchai 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 Ever Glory with a short position of China Yuchai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ever Glory and China Yuchai.

Diversification Opportunities for Ever Glory and China Yuchai

0.0

Correlation Coefficient

Ever Glory  China Yuchai

Pay attention - limited upside

The 3 months correlation between Ever and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ever Glory International Group and China Yuchai International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Yuchai Interna and Ever Glory 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 Ever Glory International Group are associated (or correlated) with China Yuchai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Yuchai Interna has no effect on the direction of Ever Glory i.e., Ever Glory and China Yuchai go up and down completely randomly.

Pair Corralation between Ever Glory and China Yuchai

If you would invest  1,107  in China Yuchai International on December 27, 2024 and sell it today you would earn a total of  596.00  from holding China Yuchai International or generate 53.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ever Glory International Group  vs.  China Yuchai International

Ever Glory Internati

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ever Glory International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Ever Glory is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

China Yuchai Interna

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Yuchai International are ranked lower than 10 (%) 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.

Pair Trading with Ever Glory and China Yuchai

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

The idea behind Ever Glory International Group and China Yuchai International 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..