Correlation Between Yuexiu Transport and Suncorp Group

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

Diversification Opportunities for Yuexiu Transport and Suncorp Group

0.5

Correlation Coefficient

Yuexiu Transport  Suncorp Group

Very weak diversification

The 3 months correlation between Yuexiu and Suncorp is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Suncorp Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group Limited 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 Suncorp Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group Limited has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Suncorp Group go up and down completely randomly.

Pair Corralation between Yuexiu Transport and Suncorp Group

Assuming the 90 days horizon Yuexiu Transport Infrastructure is expected to under-perform the Suncorp Group. In addition to that, Yuexiu Transport is 1.98 times more volatile than Suncorp Group Limited. It trades about -0.13 of its total potential returns per unit of risk. Suncorp Group Limited is currently generating about 0.23 per unit of volatility. If you would invest  1,130  in Suncorp Group Limited on October 26, 2024 and sell it today you would earn a total of  60.00  from holding Suncorp Group Limited or generate 5.31% return on investment over 90 days.

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

Yuexiu Transport Infrastructur  vs.  Suncorp Group Limited

Yuexiu Transport Inf

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuexiu Transport Infrastructure are ranked lower than 9 (%) 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.

Suncorp Group Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Suncorp Group Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Suncorp Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Yuexiu Transport and Suncorp Group

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

The idea behind Yuexiu Transport Infrastructure and Suncorp Group Limited 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.