Correlation Between Grocery Outlet and Yuexiu Transport

Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Yuexiu Transport 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 Grocery Outlet and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grocery Outlet Holding and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on Grocery Outlet and Yuexiu Transport 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 Grocery Outlet with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Yuexiu Transport.

Diversification Opportunities for Grocery Outlet and Yuexiu Transport

0.59

Correlation Coefficient

Grocery Outlet  Yuexiu Transport

Very weak diversification

The 3 months correlation between Grocery and Yuexiu is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Yuexiu Transport go up and down completely randomly.

Pair Corralation between Grocery Outlet and Yuexiu Transport

If you would invest  58.00  in Yuexiu Transport Infrastructure on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Yuexiu Transport Infrastructure or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Grocery Outlet Holding  vs.  Yuexiu Transport Infrastructur

Grocery Outlet Holding

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Yuexiu Transport Inf

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuexiu Transport Infrastructure are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Yuexiu Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grocery Outlet and Yuexiu Transport

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

The idea behind Grocery Outlet Holding and Yuexiu Transport 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.