Correlation Between China Metal and Dimerco Data

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

By analyzing existing cross correlation between China Metal Products and Dimerco Data System, you can compare the effects of market volatilities on China Metal and Dimerco Data 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 China Metal with a short position of Dimerco Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Dimerco Data.

Diversification Opportunities for China Metal and Dimerco Data

0.21

Correlation Coefficient

China Metal  Dimerco Data

Modest diversification

The 3 months correlation between China and Dimerco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Dimerco Data System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimerco Data System and China 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 China Metal Products are associated (or correlated) with Dimerco Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimerco Data System has no effect on the direction of China Metal i.e., China Metal and Dimerco Data go up and down completely randomly.

Pair Corralation between China Metal and Dimerco Data

Assuming the 90 days trading horizon China Metal Products is expected to under-perform the Dimerco Data. In addition to that, China Metal is 1.23 times more volatile than Dimerco Data System. It trades about -0.02 of its total potential returns per unit of risk. Dimerco Data System is currently generating about 0.2 per unit of volatility. If you would invest  11,800  in Dimerco Data System on December 24, 2024 and sell it today you would earn a total of  1,450  from holding Dimerco Data System or generate 12.29% return on investment over 90 days.

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

China Metal Products  vs.  Dimerco Data System

China Metal Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Metal Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, China Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dimerco Data System

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimerco Data System are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Dimerco Data showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Metal and Dimerco Data

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

The idea behind China Metal Products and Dimerco Data System 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.