Correlation Between Verra Mobility and Jiangsu Expressway

Can any of the company-specific risk be diversified away by investing in both Verra Mobility and Jiangsu Expressway 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 Verra Mobility and Jiangsu Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Verra Mobility Corp and Jiangsu Expressway Co, you can compare the effects of market volatilities on Verra Mobility and Jiangsu Expressway 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 Verra Mobility with a short position of Jiangsu Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verra Mobility and Jiangsu Expressway.

Diversification Opportunities for Verra Mobility and Jiangsu Expressway

0.1

Correlation Coefficient

Verra Mobility  Jiangsu Expressway

Average diversification

The 3 months correlation between Verra and Jiangsu is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility Corp and Jiangsu Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway and Verra Mobility 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 Verra Mobility Corp are associated (or correlated) with Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Verra Mobility i.e., Verra Mobility and Jiangsu Expressway go up and down completely randomly.

Pair Corralation between Verra Mobility and Jiangsu Expressway

Given the investment horizon of 90 days Verra Mobility Corp is expected to generate 0.25 times more return on investment than Jiangsu Expressway. However, Verra Mobility Corp is 3.96 times less risky than Jiangsu Expressway. It trades about 0.56 of its potential returns per unit of risk. Jiangsu Expressway Co is currently generating about -0.02 per unit of risk. If you would invest  2,391  in Verra Mobility Corp on October 25, 2024 and sell it today you would earn a total of  199.00  from holding Verra Mobility Corp or generate 8.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Verra Mobility Corp  vs.  Jiangsu Expressway Co

Verra Mobility Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verra Mobility Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Verra Mobility is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Jiangsu Expressway

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Expressway Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Jiangsu Expressway is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Verra Mobility and Jiangsu Expressway

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

The idea behind Verra Mobility Corp and Jiangsu Expressway Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.