Correlation Between Yuexiu Transport and GOLD ROAD

Can any of the company-specific risk be diversified away by investing in both Yuexiu Transport and GOLD ROAD 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 GOLD ROAD 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 GOLD ROAD RES, you can compare the effects of market volatilities on Yuexiu Transport and GOLD ROAD 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 GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuexiu Transport and GOLD ROAD.

Diversification Opportunities for Yuexiu Transport and GOLD ROAD

-0.13

Correlation Coefficient

Yuexiu Transport  GOLD ROAD

Good diversification

The 3 months correlation between Yuexiu and GOLD is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and GOLD ROAD go up and down completely randomly.

Pair Corralation between Yuexiu Transport and GOLD ROAD

Assuming the 90 days horizon Yuexiu Transport Infrastructure is expected to under-perform the GOLD ROAD. But the stock apears to be less risky and, when comparing its historical volatility, Yuexiu Transport Infrastructure is 1.07 times less risky than GOLD ROAD. The stock trades about -0.01 of its potential returns per unit of risk. The GOLD ROAD RES is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  120.00  in GOLD ROAD RES on December 20, 2024 and sell it today you would earn a total of  19.00  from holding GOLD ROAD RES or generate 15.83% return on investment over 90 days.

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

Yuexiu Transport Infrastructur  vs.  GOLD ROAD RES

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.

GOLD ROAD RES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yuexiu Transport and GOLD ROAD

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

The idea behind Yuexiu Transport Infrastructure and GOLD ROAD RES 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.