Correlation Between Yuexiu Transport and Shenzhen Investment

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

Diversification Opportunities for Yuexiu Transport and Shenzhen Investment

-1.0

Correlation Coefficient

Yuexiu Transport  Shenzhen Investment

Pay attention - limited upside

The 3 months correlation between Yuexiu and Shenzhen is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Shenzhen Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Investment 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 Shenzhen Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Investment has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Shenzhen Investment go up and down completely randomly.

Pair Corralation between Yuexiu Transport and Shenzhen Investment

If you would invest  22.00  in Shenzhen Investment Holdings on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Shenzhen Investment Holdings or generate 0.0% return on investment over 90 days.

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

Yuexiu Transport Infrastructur  vs.  Shenzhen Investment Holdings

Yuexiu Transport Inf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yuexiu Transport Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yuexiu Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Shenzhen Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Investment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Shenzhen Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Yuexiu Transport and Shenzhen Investment

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

The idea behind Yuexiu Transport Infrastructure and Shenzhen Investment Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.