Correlation Between Dymatic Chemicals and Hua Xia

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

By analyzing existing cross correlation between Dymatic Chemicals and Hua Xia Bank, you can compare the effects of market volatilities on Dymatic Chemicals and Hua Xia 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 Hua Xia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dymatic Chemicals and Hua Xia.

Diversification Opportunities for Dymatic Chemicals and Hua Xia

0.41

Correlation Coefficient

Dymatic Chemicals  Hua Xia

Very weak diversification

The 3 months correlation between Dymatic and Hua is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dymatic Chemicals and Hua Xia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Xia Bank 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 Hua Xia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Xia Bank has no effect on the direction of Dymatic Chemicals i.e., Dymatic Chemicals and Hua Xia go up and down completely randomly.

Pair Corralation between Dymatic Chemicals and Hua Xia

Assuming the 90 days trading horizon Dymatic Chemicals is expected to under-perform the Hua Xia. In addition to that, Dymatic Chemicals is 1.99 times more volatile than Hua Xia Bank. It trades about -0.1 of its total potential returns per unit of risk. Hua Xia Bank is currently generating about -0.12 per unit of volatility. If you would invest  778.00  in Hua Xia Bank on October 20, 2024 and sell it today you would lose (24.00) from holding Hua Xia Bank or give up 3.08% of portfolio value over 90 days.

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

Dymatic Chemicals  vs.  Hua Xia Bank

Dymatic Chemicals

Risk-Adjusted Performance

6 of 100

Modest

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

Hua Xia Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hua Xia Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hua Xia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dymatic Chemicals and Hua Xia

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

The idea behind Dymatic Chemicals and Hua Xia Bank 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.