Correlation Between CHINA DEVELOPMENT and Da Li
Can any of the company-specific risk be diversified away by investing in both CHINA DEVELOPMENT and Da Li 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 DEVELOPMENT and Da Li into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA DEVELOPMENT FINANCIAL and Da Li Development Co, you can compare the effects of market volatilities on CHINA DEVELOPMENT and Da Li 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 DEVELOPMENT with a short position of Da Li. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA DEVELOPMENT and Da Li.
Diversification Opportunities for CHINA DEVELOPMENT and Da Li
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and 6177 is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding CHINA DEVELOPMENT FINANCIAL and Da Li Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Li Development and CHINA DEVELOPMENT 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 DEVELOPMENT FINANCIAL are associated (or correlated) with Da Li. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Li Development has no effect on the direction of CHINA DEVELOPMENT i.e., CHINA DEVELOPMENT and Da Li go up and down completely randomly.
Pair Corralation between CHINA DEVELOPMENT and Da Li
Assuming the 90 days trading horizon CHINA DEVELOPMENT is expected to generate 2.0 times less return on investment than Da Li. But when comparing it to its historical volatility, CHINA DEVELOPMENT FINANCIAL is 5.56 times less risky than Da Li. It trades about 0.15 of its potential returns per unit of risk. Da Li Development Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,155 in Da Li Development Co on September 26, 2024 and sell it today you would earn a total of 1,200 from holding Da Li Development Co or generate 38.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.67% |
Values | Daily Returns |
CHINA DEVELOPMENT FINANCIAL vs. Da Li Development Co
Performance |
Timeline |
CHINA DEVELOPMENT |
Da Li Development |
CHINA DEVELOPMENT and Da Li Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHINA DEVELOPMENT and Da Li
The main advantage of trading using opposite CHINA DEVELOPMENT and Da Li positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA DEVELOPMENT position performs unexpectedly, Da Li 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 Da Li will offset losses from the drop in Da Li's long position.CHINA DEVELOPMENT vs. Asmedia Technology | CHINA DEVELOPMENT vs. Trade Van Information Services | CHINA DEVELOPMENT vs. Datavan International | CHINA DEVELOPMENT vs. Transcend Information |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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