Correlation Between Daiyang Metal and SS TECH

Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and SS TECH 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 Daiyang Metal and SS TECH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daiyang Metal Co and SS TECH, you can compare the effects of market volatilities on Daiyang Metal and SS TECH 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 Daiyang Metal with a short position of SS TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and SS TECH.

Diversification Opportunities for Daiyang Metal and SS TECH

0.74

Correlation Coefficient

Daiyang Metal  SS TECH

Poor diversification

The 3 months correlation between Daiyang and 101490 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and SS TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SS TECH and Daiyang Metal 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 Daiyang Metal Co are associated (or correlated) with SS TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SS TECH has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and SS TECH go up and down completely randomly.

Pair Corralation between Daiyang Metal and SS TECH

Assuming the 90 days trading horizon Daiyang Metal Co is expected to under-perform the SS TECH. In addition to that, Daiyang Metal is 1.36 times more volatile than SS TECH. It trades about -0.11 of its total potential returns per unit of risk. SS TECH is currently generating about -0.08 per unit of volatility. If you would invest  2,655,000  in SS TECH on September 3, 2024 and sell it today you would lose (410,000) from holding SS TECH or give up 15.44% of portfolio value over 90 days.

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

Daiyang Metal Co  vs.  SS TECH

Daiyang Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daiyang Metal Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SS TECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SS TECH 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Daiyang Metal and SS TECH

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

The idea behind Daiyang Metal Co and SS TECH 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.