Correlation Between BUDWEISER BREWUNSPADR/4 and Yuexiu Transport

Can any of the company-specific risk be diversified away by investing in both BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4 and Yuexiu Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BUDWEISER BREWUNSPADR4 and Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4 with a short position of Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of BUDWEISER BREWUNSPADR/4 and Yuexiu Transport.

Diversification Opportunities for BUDWEISER BREWUNSPADR/4 and Yuexiu Transport

-0.67

Correlation Coefficient

BUDWEISER BREWUNSPADR/4  Yuexiu Transport

Excellent diversification

The 3 months correlation between BUDWEISER and Yuexiu is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BUDWEISER BREWUNSPADR4 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 BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR4 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 BUDWEISER BREWUNSPADR/4 i.e., BUDWEISER BREWUNSPADR/4 and Yuexiu Transport go up and down completely randomly.

Pair Corralation between BUDWEISER BREWUNSPADR/4 and Yuexiu Transport

Assuming the 90 days trading horizon BUDWEISER BREWUNSPADR4 is expected to generate 3.79 times more return on investment than Yuexiu Transport. However, BUDWEISER BREWUNSPADR/4 is 3.79 times more volatile than Yuexiu Transport Infrastructure. It trades about 0.09 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.32 per unit of risk. If you would invest  314.00  in BUDWEISER BREWUNSPADR4 on September 24, 2024 and sell it today you would earn a total of  14.00  from holding BUDWEISER BREWUNSPADR4 or generate 4.46% return on investment over 90 days.

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

BUDWEISER BREWUNSPADR4  vs.  Yuexiu Transport Infrastructur

BUDWEISER BREWUNSPADR/4

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days BUDWEISER BREWUNSPADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, BUDWEISER BREWUNSPADR/4 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Yuexiu Transport Inf

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yuexiu Transport Infrastructure are ranked lower than 11 (%) 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 BUDWEISER BREWUNSPADR/4 and Yuexiu Transport

The main advantage of trading using opposite BUDWEISER BREWUNSPADR/4 and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR4 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.