Correlation Between Yuexiu Transport and Falcons Beyond

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

Diversification Opportunities for Yuexiu Transport and Falcons Beyond

-0.38

Correlation Coefficient

Yuexiu Transport  Falcons Beyond

Very good diversification

The 3 months correlation between Yuexiu and Falcons is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Falcons Beyond Global, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcons Beyond Global, 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 Falcons Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcons Beyond Global, has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Falcons Beyond go up and down completely randomly.

Pair Corralation between Yuexiu Transport and Falcons Beyond

Assuming the 90 days horizon Yuexiu Transport is expected to generate 1.16 times less return on investment than Falcons Beyond. But when comparing it to its historical volatility, Yuexiu Transport Infrastructure is 4.43 times less risky than Falcons Beyond. It trades about 0.14 of its potential returns per unit of risk. Falcons Beyond Global, is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Falcons Beyond Global, on October 5, 2024 and sell it today you would lose (23.00) from holding Falcons Beyond Global, or give up 22.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.61%
Values	Daily Returns

Yuexiu Transport Infrastructur  vs.  Falcons Beyond Global,

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.

Falcons Beyond Global,

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Falcons Beyond Global, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak fundamental indicators, Falcons Beyond showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yuexiu Transport and Falcons Beyond

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

The idea behind Yuexiu Transport Infrastructure and Falcons Beyond Global, 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.