Correlation Between AGCO and China Yuchai
Can any of the company-specific risk be diversified away by investing in both AGCO and China Yuchai 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 AGCO and China Yuchai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGCO Corporation and China Yuchai International, you can compare the effects of market volatilities on AGCO and China Yuchai 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 AGCO with a short position of China Yuchai. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGCO and China Yuchai.
Diversification Opportunities for AGCO and China Yuchai
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AGCO and China is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. and China Yuchai International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Yuchai Interna and AGCO 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 AGCO Corporation are associated (or correlated) with China Yuchai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Yuchai Interna has no effect on the direction of AGCO i.e., AGCO and China Yuchai go up and down completely randomly.
Pair Corralation between AGCO and China Yuchai
Given the investment horizon of 90 days AGCO Corporation is expected to generate 0.93 times more return on investment than China Yuchai. However, AGCO Corporation is 1.08 times less risky than China Yuchai. It trades about 0.02 of its potential returns per unit of risk. China Yuchai International is currently generating about 0.0 per unit of risk. If you would invest 11,200 in AGCO Corporation on January 26, 2024 and sell it today you would earn a total of 669.00 from holding AGCO Corporation or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGCO Corp. vs. China Yuchai International
Performance |
| Timeline |
| AGCO |
| China Yuchai Interna |
AGCO and China Yuchai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGCO and China Yuchai
The main advantage of trading using opposite AGCO and China Yuchai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGCO position performs unexpectedly, China Yuchai 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 Yuchai will offset losses from the drop in China Yuchai's long position.The idea behind AGCO Corporation and China Yuchai International 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.| China Yuchai vs. Parker Hannifin | China Yuchai vs. Emerson Electric | China Yuchai vs. Smith AO | China Yuchai vs. Watts Water Technologies |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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