Correlation Between Daoming OpticsChemical and Hengli Petrochemical
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By analyzing existing cross correlation between Daoming OpticsChemical Co and Hengli Petrochemical Co, you can compare the effects of market volatilities on Daoming OpticsChemical and Hengli Petrochemical 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 Daoming OpticsChemical with a short position of Hengli Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daoming OpticsChemical and Hengli Petrochemical.
Diversification Opportunities for Daoming OpticsChemical and Hengli Petrochemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daoming and Hengli is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Daoming OpticsChemical Co and Hengli Petrochemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengli Petrochemical and Daoming OpticsChemical 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 Daoming OpticsChemical Co are associated (or correlated) with Hengli Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengli Petrochemical has no effect on the direction of Daoming OpticsChemical i.e., Daoming OpticsChemical and Hengli Petrochemical go up and down completely randomly.
Pair Corralation between Daoming OpticsChemical and Hengli Petrochemical
Assuming the 90 days trading horizon Daoming OpticsChemical Co is expected to generate 2.86 times more return on investment than Hengli Petrochemical. However, Daoming OpticsChemical is 2.86 times more volatile than Hengli Petrochemical Co. It trades about 0.13 of its potential returns per unit of risk. Hengli Petrochemical Co is currently generating about 0.32 per unit of risk. If you would invest 855.00 in Daoming OpticsChemical Co on September 24, 2024 and sell it today you would earn a total of 72.00 from holding Daoming OpticsChemical Co or generate 8.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Daoming OpticsChemical Co vs. Hengli Petrochemical Co
Performance |
Timeline |
Daoming OpticsChemical |
Hengli Petrochemical |
Daoming OpticsChemical and Hengli Petrochemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Daoming OpticsChemical and Hengli Petrochemical
The main advantage of trading using opposite Daoming OpticsChemical and Hengli Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daoming OpticsChemical position performs unexpectedly, Hengli Petrochemical 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 Hengli Petrochemical will offset losses from the drop in Hengli Petrochemical's long position.Daoming OpticsChemical vs. Zijin Mining Group | Daoming OpticsChemical vs. Wanhua Chemical Group | Daoming OpticsChemical vs. Baoshan Iron Steel | Daoming OpticsChemical vs. Shandong Gold Mining |
Hengli Petrochemical vs. Zijin Mining Group | Hengli Petrochemical vs. Wanhua Chemical Group | Hengli Petrochemical vs. Baoshan Iron Steel | Hengli Petrochemical vs. Shandong Gold Mining |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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