Correlation Between Shenzhen Dynanonic and Inner Mongolia

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Can any of the company-specific risk be diversified away by investing in both Shenzhen Dynanonic and Inner Mongolia 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 Shenzhen Dynanonic and Inner Mongolia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenzhen Dynanonic Co and Inner Mongolia BaoTou, you can compare the effects of market volatilities on Shenzhen Dynanonic and Inner Mongolia 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 Shenzhen Dynanonic with a short position of Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Dynanonic and Inner Mongolia.

Diversification Opportunities for Shenzhen Dynanonic and Inner Mongolia

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Shenzhen and Inner is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Dynanonic Co and Inner Mongolia BaoTou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia BaoTou and Shenzhen Dynanonic 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 Shenzhen Dynanonic Co are associated (or correlated) with Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia BaoTou has no effect on the direction of Shenzhen Dynanonic i.e., Shenzhen Dynanonic and Inner Mongolia go up and down completely randomly.

Pair Corralation between Shenzhen Dynanonic and Inner Mongolia

Assuming the 90 days trading horizon Shenzhen Dynanonic is expected to generate 1.35 times less return on investment than Inner Mongolia. In addition to that, Shenzhen Dynanonic is 1.66 times more volatile than Inner Mongolia BaoTou. It trades about 0.03 of its total potential returns per unit of risk. Inner Mongolia BaoTou is currently generating about 0.06 per unit of volatility. If you would invest  173.00  in Inner Mongolia BaoTou on September 28, 2024 and sell it today you would earn a total of  16.00  from holding Inner Mongolia BaoTou or generate 9.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Shenzhen Dynanonic Co  vs.  Inner Mongolia BaoTou

 Performance 
       Timeline  
Shenzhen Dynanonic 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Dynanonic Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Dynanonic may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Inner Mongolia BaoTou 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Inner Mongolia BaoTou are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inner Mongolia sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Dynanonic and Inner Mongolia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shenzhen Dynanonic and Inner Mongolia

The main advantage of trading using opposite Shenzhen Dynanonic and Inner Mongolia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Dynanonic position performs unexpectedly, Inner Mongolia 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 Inner Mongolia will offset losses from the drop in Inner Mongolia's long position.
The idea behind Shenzhen Dynanonic Co and Inner Mongolia BaoTou 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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