Correlation Between Yuexiu Transport and Balchem

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

Diversification Opportunities for Yuexiu Transport and Balchem

0.35

Correlation Coefficient

Yuexiu Transport  Balchem

Weak diversification

The 3 months correlation between Yuexiu and Balchem is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem 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 Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Balchem go up and down completely randomly.

Pair Corralation between Yuexiu Transport and Balchem

If you would invest  58.00  in Yuexiu Transport Infrastructure on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Yuexiu Transport Infrastructure or generate 0.0% return on investment over 90 days.

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

Yuexiu Transport Infrastructur  vs.  Balchem

Yuexiu Transport Inf

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuexiu Transport Infrastructure are ranked lower than 10 (%) 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.

Balchem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balchem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Balchem is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Yuexiu Transport and Balchem

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

The idea behind Yuexiu Transport Infrastructure and Balchem 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.