Correlation Between Ye Chiu and China International

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

By analyzing existing cross correlation between Ye Chiu Metal and China International Capital, you can compare the effects of market volatilities on Ye Chiu and China International 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 Ye Chiu with a short position of China International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ye Chiu and China International.

Diversification Opportunities for Ye Chiu and China International

0.91

Correlation Coefficient

Ye Chiu  China International

Almost no diversification

The 3 months correlation between 601388 and China is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ye Chiu Metal and China International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International and Ye Chiu 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 Ye Chiu Metal are associated (or correlated) with China International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of Ye Chiu i.e., Ye Chiu and China International go up and down completely randomly.

Pair Corralation between Ye Chiu and China International

Assuming the 90 days trading horizon Ye Chiu is expected to generate 1.01 times less return on investment than China International. But when comparing it to its historical volatility, Ye Chiu Metal is 1.29 times less risky than China International. It trades about 0.18 of its potential returns per unit of risk. China International Capital is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,767  in China International Capital on September 4, 2024 and sell it today you would earn a total of  883.00  from holding China International Capital or generate 31.91% return on investment over 90 days.

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

Ye Chiu Metal  vs.  China International Capital

Ye Chiu Metal

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ye Chiu Metal are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ye Chiu sustained solid returns over the last few months and may actually be approaching a breakup point.

China International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China International Capital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ye Chiu and China International

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

The idea behind Ye Chiu Metal and China International Capital 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.