Correlation Between Dongbang Transport and N Citron

Can any of the company-specific risk be diversified away by investing in both Dongbang Transport and N Citron 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 N Citron 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 N Citron, you can compare the effects of market volatilities on Dongbang Transport and N Citron 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 N Citron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and N Citron.

Diversification Opportunities for Dongbang Transport and N Citron

0.87

Correlation Coefficient

Dongbang Transport  N Citron

Very poor diversification

The 3 months correlation between Dongbang and 101400 is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and N Citron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N Citron 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 N Citron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N Citron has no effect on the direction of Dongbang Transport i.e., Dongbang Transport and N Citron go up and down completely randomly.

Pair Corralation between Dongbang Transport and N Citron

Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 1.17 times more return on investment than N Citron. However, Dongbang Transport is 1.17 times more volatile than N Citron. It trades about 0.36 of its potential returns per unit of risk. N Citron is currently generating about 0.15 per unit of risk. If you would invest  188,000  in Dongbang Transport Logistics on October 10, 2024 and sell it today you would earn a total of  37,500  from holding Dongbang Transport Logistics or generate 19.95% return on investment over 90 days.

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

Dongbang Transport Logistics  vs.  N Citron

Dongbang Transport

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

N Citron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days N Citron 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.

Pair Trading with Dongbang Transport and N Citron

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

The idea behind Dongbang Transport Logistics and N Citron 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..