Correlation Between Yuexiu Transport and Kaiser Aluminum

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

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

Diversification Opportunities for Yuexiu Transport and Kaiser Aluminum

0.85

Correlation Coefficient

Yuexiu Transport  Kaiser Aluminum

Very poor diversification

The 3 months correlation between Yuexiu and Kaiser is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Yuexiu Transport Infrastructur and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Yuexiu Transport 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 Yuexiu Transport Infrastructure are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Yuexiu Transport i.e., Yuexiu Transport and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between Yuexiu Transport and Kaiser Aluminum

Assuming the 90 days horizon Yuexiu Transport Infrastructure is expected to generate 0.46 times more return on investment than Kaiser Aluminum. However, Yuexiu Transport Infrastructure is 2.17 times less risky than Kaiser Aluminum. It trades about 0.32 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.5 per unit of risk. If you would invest  43.00  in Yuexiu Transport Infrastructure on September 25, 2024 and sell it today you would earn a total of  2.00  from holding Yuexiu Transport Infrastructure or generate 4.65% return on investment over 90 days.

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

Yuexiu Transport Infrastructur  vs.  Kaiser Aluminum

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.

Kaiser Aluminum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kaiser Aluminum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Yuexiu Transport and Kaiser Aluminum

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

The idea behind Yuexiu Transport Infrastructure and Kaiser Aluminum 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.