Correlation Between Yuexiu Transport and SPORT LISBOA

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

Diversification Opportunities for Yuexiu Transport and SPORT LISBOA

-0.33

Correlation Coefficient

Yuexiu Transport  SPORT LISBOA

Very good diversification

The 3 months correlation between Yuexiu and SPORT is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E 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 SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and SPORT LISBOA go up and down completely randomly.

Pair Corralation between Yuexiu Transport and SPORT LISBOA

Assuming the 90 days horizon Yuexiu Transport Infrastructure is expected to under-perform the SPORT LISBOA. But the stock apears to be less risky and, when comparing its historical volatility, Yuexiu Transport Infrastructure is 1.28 times less risky than SPORT LISBOA. The stock trades about -0.02 of its potential returns per unit of risk. The SPORT LISBOA E is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  314.00  in SPORT LISBOA E on October 11, 2024 and sell it today you would earn a total of  19.00  from holding SPORT LISBOA E or generate 6.05% 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.  SPORT LISBOA E

Yuexiu Transport Inf

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yuexiu Transport Infrastructure are ranked lower than 11 (%) 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.

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yuexiu Transport and SPORT LISBOA

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

The idea behind Yuexiu Transport Infrastructure and SPORT LISBOA E 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.