Correlation Between Dongbang Transport and MEDIANA CoLtd

Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and MEDIANA CoLtd 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 Dongbang Transport and MEDIANA CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dongbang Transport Logistics and MEDIANA CoLtd, you can compare the effects of market volatilities on Dongbang Transport and MEDIANA CoLtd 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 Dongbang Transport with a short position of MEDIANA CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and MEDIANA CoLtd.

Diversification Opportunities for Dongbang Transport and MEDIANA CoLtd

0.19

Correlation Coefficient

Dongbang Transport  MEDIANA CoLtd

Average diversification

The 3 months correlation between Dongbang and MEDIANA is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and MEDIANA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIANA CoLtd and Dongbang Transport 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 Dongbang Transport Logistics are associated (or correlated) with MEDIANA CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIANA CoLtd has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and MEDIANA CoLtd go up and down completely randomly.

Pair Corralation between Dongbang Transport and MEDIANA CoLtd

Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to under-perform the MEDIANA CoLtd. In addition to that, Dongbang Transport is 1.07 times more volatile than MEDIANA CoLtd. It trades about -0.04 of its total potential returns per unit of risk. MEDIANA CoLtd is currently generating about 0.0 per unit of volatility. If you would invest  495,000  in MEDIANA CoLtd on November 20, 2024 and sell it today you would lose (11,500) from holding MEDIANA CoLtd or give up 2.32% of portfolio value over 90 days.

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

Dongbang Transport Logistics  vs.  MEDIANA CoLtd

Dongbang Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dongbang Transport Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MEDIANA CoLtd

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Dongbang Transport and MEDIANA CoLtd

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

The idea behind Dongbang Transport Logistics and MEDIANA CoLtd 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.