Correlation Between Crane NXT and China Yuchai
Can any of the company-specific risk be diversified away by investing in both Crane NXT 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 Crane NXT and China Yuchai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane NXT Co and China Yuchai International, you can compare the effects of market volatilities on Crane NXT 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 Crane NXT with a short position of China Yuchai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane NXT and China Yuchai.
Diversification Opportunities for Crane NXT and China Yuchai
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crane and China is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Crane NXT Co 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 Crane NXT 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 Crane NXT Co 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 Crane NXT i.e., Crane NXT and China Yuchai go up and down completely randomly.
Pair Corralation between Crane NXT and China Yuchai
Considering the 90-day investment horizon Crane NXT Co is expected to generate 1.22 times more return on investment than China Yuchai. However, Crane NXT is 1.22 times more volatile than China Yuchai International. It trades about 0.04 of its potential returns per unit of risk. China Yuchai International is currently generating about -0.04 per unit of risk. If you would invest 5,837 in Crane NXT Co on February 19, 2024 and sell it today you would earn a total of 204.00 from holding Crane NXT Co or generate 3.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Crane NXT Co vs. China Yuchai International
Performance |
Timeline |
Crane NXT |
China Yuchai Interna |
Crane NXT and China Yuchai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Crane NXT and China Yuchai
The main advantage of trading using opposite Crane NXT and China Yuchai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane NXT 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.Crane NXT vs. Illinois Tool Works | Crane NXT vs. Pentair PLC | Crane NXT vs. Emerson Electric | Crane NXT vs. Smith AO |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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