Correlation Between Changchun High and Duzhe Publishing

Can any of the company-specific risk be diversified away by investing in both Changchun High and Duzhe Publishing 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 Changchun High and Duzhe Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Changchun High New and Duzhe Publishing Media, you can compare the effects of market volatilities on Changchun High and Duzhe Publishing 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 Changchun High with a short position of Duzhe Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun High and Duzhe Publishing.

Diversification Opportunities for Changchun High and Duzhe Publishing

0.73

Correlation Coefficient

Changchun High  Duzhe Publishing

Poor diversification

The 3 months correlation between Changchun and Duzhe is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Changchun High New and Duzhe Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duzhe Publishing Media and Changchun High 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 Changchun High New are associated (or correlated) with Duzhe Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duzhe Publishing Media has no effect on the direction of Changchun High i.e., Changchun High and Duzhe Publishing go up and down completely randomly.

Pair Corralation between Changchun High and Duzhe Publishing

Assuming the 90 days trading horizon Changchun High New is expected to under-perform the Duzhe Publishing. But the stock apears to be less risky and, when comparing its historical volatility, Changchun High New is 1.62 times less risky than Duzhe Publishing. The stock trades about 0.0 of its potential returns per unit of risk. The Duzhe Publishing Media is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  619.00  in Duzhe Publishing Media on December 25, 2024 and sell it today you would earn a total of  69.00  from holding Duzhe Publishing Media or generate 11.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

Changchun High New  vs.  Duzhe Publishing Media

Changchun High New

Risk-Adjusted Performance

Very Weak

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

Duzhe Publishing Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Duzhe Publishing Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Duzhe Publishing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Changchun High and Duzhe Publishing

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

The idea behind Changchun High New and Duzhe Publishing Media 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.