Correlation Between Chongqing Landai and Duzhe Publishing

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

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

Diversification Opportunities for Chongqing Landai and Duzhe Publishing

0.36

Correlation Coefficient

Chongqing Landai  Duzhe Publishing

Weak diversification

The 3 months correlation between Chongqing and Duzhe is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Landai Powertrain 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 Chongqing Landai 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 Chongqing Landai Powertrain 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 Chongqing Landai i.e., Chongqing Landai and Duzhe Publishing go up and down completely randomly.

Pair Corralation between Chongqing Landai and Duzhe Publishing

Assuming the 90 days trading horizon Chongqing Landai Powertrain is expected to generate 2.09 times more return on investment than Duzhe Publishing. However, Chongqing Landai is 2.09 times more volatile than Duzhe Publishing Media. It trades about 0.11 of its potential returns per unit of risk. Duzhe Publishing Media is currently generating about -0.06 per unit of risk. If you would invest  926.00  in Chongqing Landai Powertrain on October 27, 2024 and sell it today you would earn a total of  88.00  from holding Chongqing Landai Powertrain or generate 9.5% return on investment over 90 days.

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

Chongqing Landai Powertrain  vs.  Duzhe Publishing Media

Chongqing Landai Pow

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chongqing Landai Powertrain are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chongqing Landai sustained solid returns over the last few months and may actually be approaching a breakup point.

Duzhe Publishing Media

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Duzhe Publishing Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Duzhe Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chongqing Landai and Duzhe Publishing

The main advantage of trading using opposite Chongqing Landai and Duzhe Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Landai 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 Chongqing Landai Powertrain 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.