Correlation Between Yuexiu Transport and BTC Digital

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

Diversification Opportunities for Yuexiu Transport and BTC Digital

0.8

Correlation Coefficient

Yuexiu Transport  BTC Digital

Very poor diversification

The 3 months correlation between Yuexiu and BTC is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital 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 BTC Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Digital has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and BTC Digital go up and down completely randomly.

Pair Corralation between Yuexiu Transport and BTC Digital

Assuming the 90 days horizon Yuexiu Transport is expected to generate 14.11 times less return on investment than BTC Digital. But when comparing it to its historical volatility, Yuexiu Transport Infrastructure is 12.49 times less risky than BTC Digital. It trades about 0.13 of its potential returns per unit of risk. BTC Digital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  144.00  in BTC Digital on September 13, 2024 and sell it today you would earn a total of  684.00  from holding BTC Digital or generate 475.0% return on investment over 90 days.

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

Yuexiu Transport Infrastructur  vs.  BTC Digital

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 weak basic indicators, Yuexiu Transport reported solid returns over the last few months and may actually be approaching a breakup point.

BTC Digital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, BTC Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yuexiu Transport and BTC Digital

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

The idea behind Yuexiu Transport Infrastructure and BTC Digital 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.