Correlation Between Dymatic Chemicals and Guangdong Brandmax

Can any of the company-specific risk be diversified away by investing in both Dymatic Chemicals and Guangdong Brandmax 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 Dymatic Chemicals and Guangdong Brandmax into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dymatic Chemicals and Guangdong Brandmax Marketing, you can compare the effects of market volatilities on Dymatic Chemicals and Guangdong Brandmax 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 Dymatic Chemicals with a short position of Guangdong Brandmax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dymatic Chemicals and Guangdong Brandmax.

Diversification Opportunities for Dymatic Chemicals and Guangdong Brandmax

0.11

Correlation Coefficient

Dymatic Chemicals  Guangdong Brandmax

Average diversification

The 3 months correlation between Dymatic and Guangdong is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dymatic Chemicals and Guangdong Brandmax Marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Brandmax and Dymatic Chemicals 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 Dymatic Chemicals are associated (or correlated) with Guangdong Brandmax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Brandmax has no effect on the direction of Dymatic Chemicals i.e., Dymatic Chemicals and Guangdong Brandmax go up and down completely randomly.

Pair Corralation between Dymatic Chemicals and Guangdong Brandmax

Assuming the 90 days trading horizon Dymatic Chemicals is expected to generate 0.37 times more return on investment than Guangdong Brandmax. However, Dymatic Chemicals is 2.67 times less risky than Guangdong Brandmax. It trades about 0.11 of its potential returns per unit of risk. Guangdong Brandmax Marketing is currently generating about -0.06 per unit of risk. If you would invest  603.00  in Dymatic Chemicals on December 27, 2024 and sell it today you would earn a total of  56.00  from holding Dymatic Chemicals or generate 9.29% return on investment over 90 days.

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

Dymatic Chemicals  vs.  Guangdong Brandmax Marketing

Dymatic Chemicals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dymatic Chemicals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dymatic Chemicals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Guangdong Brandmax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guangdong Brandmax Marketing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dymatic Chemicals and Guangdong Brandmax

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

The idea behind Dymatic Chemicals and Guangdong Brandmax Marketing 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.