Correlation Between COPLAND ROAD and Yuexiu Transport

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

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

Diversification Opportunities for COPLAND ROAD and Yuexiu Transport

-0.29

Correlation Coefficient

COPLAND ROAD  Yuexiu Transport

Very good diversification

The 3 months correlation between COPLAND and Yuexiu is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding COPLAND ROAD CAPITAL 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 COPLAND ROAD 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 COPLAND ROAD CAPITAL 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 COPLAND ROAD i.e., COPLAND ROAD and Yuexiu Transport go up and down completely randomly.

Pair Corralation between COPLAND ROAD and Yuexiu Transport

Assuming the 90 days horizon COPLAND ROAD CAPITAL is expected to generate 2.9 times more return on investment than Yuexiu Transport. However, COPLAND ROAD is 2.9 times more volatile than Yuexiu Transport Infrastructure. It trades about 0.21 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  3,995  in COPLAND ROAD CAPITAL on September 25, 2024 and sell it today you would earn a total of  355.00  from holding COPLAND ROAD CAPITAL or generate 8.89% return on investment over 90 days.

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

COPLAND ROAD CAPITAL  vs.  Yuexiu Transport Infrastructur

COPLAND ROAD CAPITAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COPLAND ROAD CAPITAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COPLAND ROAD is not utilizing all of its potentials. The newest 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 COPLAND ROAD and Yuexiu Transport

The main advantage of trading using opposite COPLAND ROAD and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COPLAND ROAD 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 COPLAND ROAD CAPITAL 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.