Correlation Between Goldman Sachs and Yuexiu Transport

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Yuexiu Transport 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 Goldman Sachs and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goldman Sachs Capital and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on Goldman Sachs and Yuexiu Transport 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 Goldman Sachs with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Yuexiu Transport.

Diversification Opportunities for Goldman Sachs and Yuexiu Transport

0.07

Correlation Coefficient

Goldman Sachs  Yuexiu Transport

Significant diversification

The 3 months correlation between Goldman and Yuexiu is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Capital and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf and Goldman Sachs 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 Goldman Sachs Capital are associated (or correlated) with Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Yuexiu Transport go up and down completely randomly.

Pair Corralation between Goldman Sachs and Yuexiu Transport

Considering the 90-day investment horizon Goldman Sachs is expected to generate 1.89 times less return on investment than Yuexiu Transport. In addition to that, Goldman Sachs is 1.48 times more volatile than Yuexiu Transport Infrastructure. It trades about 0.03 of its total potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.09 per unit of volatility. If you would invest  20.00  in Yuexiu Transport Infrastructure on September 28, 2024 and sell it today you would earn a total of  38.00  from holding Yuexiu Transport Infrastructure or generate 190.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.79%
Values	Daily Returns

Goldman Sachs Capital  vs.  Yuexiu Transport Infrastructur

Goldman Sachs Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Goldman Sachs is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with Goldman Sachs and Yuexiu Transport

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

The idea behind Goldman Sachs Capital and Yuexiu Transport Infrastructure 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.