Correlation Between Vanfund Urban and Dr Peng

Can any of the company-specific risk be diversified away by investing in both Vanfund Urban and Dr Peng 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 Vanfund Urban and Dr Peng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanfund Urban Investment and Dr Peng Telecom, you can compare the effects of market volatilities on Vanfund Urban and Dr Peng 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 Vanfund Urban with a short position of Dr Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanfund Urban and Dr Peng.

Diversification Opportunities for Vanfund Urban and Dr Peng

0.63

Correlation Coefficient

Vanfund Urban  Dr Peng

Poor diversification

The 3 months correlation between Vanfund and 600804 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanfund Urban Investment and Dr Peng Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Peng Telecom and Vanfund Urban 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 Vanfund Urban Investment are associated (or correlated) with Dr Peng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Peng Telecom has no effect on the direction of Vanfund Urban i.e., Vanfund Urban and Dr Peng go up and down completely randomly.

Pair Corralation between Vanfund Urban and Dr Peng

Assuming the 90 days trading horizon Vanfund Urban Investment is expected to under-perform the Dr Peng. But the stock apears to be less risky and, when comparing its historical volatility, Vanfund Urban Investment is 1.36 times less risky than Dr Peng. The stock trades about -0.21 of its potential returns per unit of risk. The Dr Peng Telecom is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  166.00  in Dr Peng Telecom on October 7, 2024 and sell it today you would earn a total of  45.00  from holding Dr Peng Telecom or generate 27.11% return on investment over 90 days.

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

Vanfund Urban Investment  vs.  Dr Peng Telecom

Vanfund Urban Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanfund Urban Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vanfund Urban is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dr Peng Telecom

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dr Peng Telecom are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dr Peng sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanfund Urban and Dr Peng

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

The idea behind Vanfund Urban Investment and Dr Peng Telecom 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.