Correlation Between INTER CARS and Yuexiu Transport

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

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

Diversification Opportunities for INTER CARS and Yuexiu Transport

-0.16

Correlation Coefficient

INTER CARS  Yuexiu Transport

Good diversification

The 3 months correlation between INTER and Yuexiu is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA 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 INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and Yuexiu Transport go up and down completely randomly.

Pair Corralation between INTER CARS and Yuexiu Transport

Assuming the 90 days horizon INTER CARS is expected to generate 8.63 times less return on investment than Yuexiu Transport. But when comparing it to its historical volatility, INTER CARS SA is 2.65 times less risky than Yuexiu Transport. It trades about 0.05 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Yuexiu Transport Infrastructure on September 23, 2024 and sell it today you would earn a total of  15.00  from holding Yuexiu Transport Infrastructure or generate 50.0% return on investment over 90 days.

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

INTER CARS SA  vs.  Yuexiu Transport Infrastructur

INTER CARS SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INTER CARS 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 INTER CARS and Yuexiu Transport

The main advantage of trading using opposite INTER CARS and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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 INTER CARS SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.