Correlation Between Ryder System and China Natural

Can any of the company-specific risk be diversified away by investing in both Ryder System and China Natural 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 Ryder System and China Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ryder System and China Natural Resources, you can compare the effects of market volatilities on Ryder System and China Natural 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 Ryder System with a short position of China Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryder System and China Natural.

Diversification Opportunities for Ryder System and China Natural

-0.64

Correlation Coefficient

Ryder System  China Natural

Excellent diversification

The 3 months correlation between Ryder and China is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ryder System and China Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Natural Resources and Ryder System 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 Ryder System are associated (or correlated) with China Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Natural Resources has no effect on the direction of Ryder System i.e., Ryder System and China Natural go up and down completely randomly.

Pair Corralation between Ryder System and China Natural

Taking into account the 90-day investment horizon Ryder System is expected to under-perform the China Natural. But the stock apears to be less risky and, when comparing its historical volatility, Ryder System is 4.79 times less risky than China Natural. The stock trades about -0.24 of its potential returns per unit of risk. The China Natural Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  63.00  in China Natural Resources on September 27, 2024 and sell it today you would earn a total of  1.90  from holding China Natural Resources or generate 3.02% return on investment over 90 days.

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

Ryder System  vs.  China Natural Resources

Ryder System

Risk-Adjusted Performance

8 of 100

OK

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

China Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, China Natural is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ryder System and China Natural

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

The idea behind Ryder System and China Natural Resources 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.