Correlation Between Yuexiu Transport and Algonquin Power

Can any of the company-specific risk be diversified away by investing in both Yuexiu Transport and Algonquin 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 Yuexiu Transport and Algonquin Power 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 Algonquin Power Utilities, you can compare the effects of market volatilities on Yuexiu Transport and Algonquin 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 Yuexiu Transport with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuexiu Transport and Algonquin Power.

Diversification Opportunities for Yuexiu Transport and Algonquin Power

0.03

Correlation Coefficient

Yuexiu Transport  Algonquin Power

Significant diversification

The 3 months correlation between Yuexiu and Algonquin is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities 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 Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Algonquin Power go up and down completely randomly.

Pair Corralation between Yuexiu Transport and Algonquin Power

Assuming the 90 days horizon Yuexiu Transport Infrastructure is expected to under-perform the Algonquin Power. In addition to that, Yuexiu Transport is 1.23 times more volatile than Algonquin Power Utilities. It trades about -0.01 of its total potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.1 per unit of volatility. If you would invest  420.00  in Algonquin Power Utilities on December 21, 2024 and sell it today you would earn a total of  42.00  from holding Algonquin Power Utilities or generate 10.0% return on investment over 90 days.

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

Yuexiu Transport Infrastructur  vs.  Algonquin Power Utilities

Yuexiu Transport Inf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yuexiu Transport Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yuexiu Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Algonquin Power Utilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Algonquin Power may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Yuexiu Transport and Algonquin Power

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

The idea behind Yuexiu Transport Infrastructure and Algonquin Power Utilities 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.