Correlation Between Yuexiu Transport and Cardinal Health

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

Diversification Opportunities for Yuexiu Transport and Cardinal Health

0.86

Correlation Coefficient

Yuexiu Transport  Cardinal Health

Very poor diversification

The 3 months correlation between Yuexiu and Cardinal is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Cardinal Health go up and down completely randomly.

Pair Corralation between Yuexiu Transport and Cardinal Health

If you would invest  58.00  in Yuexiu Transport Infrastructure on September 25, 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	Strong
Accuracy	95.24%
Values	Daily Returns

Yuexiu Transport Infrastructur  vs.  Cardinal Health

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

Cardinal Health

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Yuexiu Transport and Cardinal Health

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

The idea behind Yuexiu Transport Infrastructure and Cardinal Health 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.