Correlation Between Clearwater Paper and China Yuchai

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Can any of the company-specific risk be diversified away by investing in both Clearwater Paper 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 Clearwater Paper and China Yuchai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearwater Paper Corp and China Yuchai International, you can compare the effects of market volatilities on Clearwater Paper 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 Clearwater Paper with a short position of China Yuchai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearwater Paper and China Yuchai.

Diversification Opportunities for Clearwater Paper and China Yuchai

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Clearwater and China is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Paper 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 Clearwater Paper 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 Clearwater Paper Corp 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 Clearwater Paper i.e., Clearwater Paper and China Yuchai go up and down completely randomly.

Pair Corralation between Clearwater Paper and China Yuchai

Considering the 90-day investment horizon Clearwater Paper Corp is expected to under-perform the China Yuchai. In addition to that, Clearwater Paper is 2.95 times more volatile than China Yuchai International. It trades about -0.15 of its total potential returns per unit of risk. China Yuchai International is currently generating about 0.02 per unit of volatility. If you would invest  713.00  in China Yuchai International on August 31, 2022 and sell it today you would earn a total of  2.00  from holding China Yuchai International or generate 0.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

Clearwater Paper Corp  vs.  China Yuchai International

 Performance (%) 
       Timeline  
Clearwater Paper Corp 
Clearwater Performance
0 of 100
Over the last 90 days Clearwater Paper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Clearwater Price Channel

China Yuchai Interna 
China Performance
0 of 100
Over the last 90 days China Yuchai International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

China Price Channel

Clearwater Paper and China Yuchai Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clearwater Paper and China Yuchai

The main advantage of trading using opposite Clearwater Paper and China Yuchai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearwater Paper 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.
Clearwater Paper vs. Holmen Ab
The idea behind Clearwater Paper Corp 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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