Correlation Between Yuexiu Transport and GVS SPA

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

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

Diversification Opportunities for Yuexiu Transport and GVS SPA

-0.83

Correlation Coefficient

Yuexiu Transport  GVS SPA

Pay attention - limited upside

The 3 months correlation between Yuexiu and GVS is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and GVS SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GVS SPA and Yuexiu Transport 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 Yuexiu Transport Infrastructure are associated (or correlated) with GVS SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GVS SPA has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and GVS SPA go up and down completely randomly.

Pair Corralation between Yuexiu Transport and GVS SPA

Assuming the 90 days horizon Yuexiu Transport Infrastructure is expected to generate 2.13 times more return on investment than GVS SPA. However, Yuexiu Transport is 2.13 times more volatile than GVS SPA. It trades about 0.11 of its potential returns per unit of risk. GVS SPA is currently generating about -0.18 per unit of risk. If you would invest  34.00  in Yuexiu Transport Infrastructure on October 25, 2024 and sell it today you would earn a total of  10.00  from holding Yuexiu Transport Infrastructure or generate 29.41% return on investment over 90 days.

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

Yuexiu Transport Infrastructur  vs.  GVS SPA

Yuexiu Transport Inf

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuexiu Transport Infrastructure are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Yuexiu Transport reported solid returns over the last few months and may actually be approaching a breakup point.

GVS SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GVS SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Yuexiu Transport and GVS SPA

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

The idea behind Yuexiu Transport Infrastructure and GVS SPA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.