Correlation Between Dongfeng Automobile and Neway Valve

Can any of the company-specific risk be diversified away by investing in both Dongfeng Automobile and Neway Valve 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 Dongfeng Automobile and Neway Valve into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dongfeng Automobile Co and Neway Valve suzhou, you can compare the effects of market volatilities on Dongfeng Automobile and Neway Valve 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 Dongfeng Automobile with a short position of Neway Valve. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfeng Automobile and Neway Valve.

Diversification Opportunities for Dongfeng Automobile and Neway Valve

0.0

Correlation Coefficient

Dongfeng Automobile  Neway Valve

Pay attention - limited upside

The 3 months correlation between Dongfeng and Neway is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dongfeng Automobile Co and Neway Valve suzhou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neway Valve suzhou and Dongfeng Automobile 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 Dongfeng Automobile Co are associated (or correlated) with Neway Valve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neway Valve suzhou has no effect on the direction of Dongfeng Automobile i.e., Dongfeng Automobile and Neway Valve go up and down completely randomly.

Pair Corralation between Dongfeng Automobile and Neway Valve

Assuming the 90 days trading horizon Dongfeng Automobile is expected to generate 4.29 times less return on investment than Neway Valve. In addition to that, Dongfeng Automobile is 1.16 times more volatile than Neway Valve suzhou. It trades about 0.03 of its total potential returns per unit of risk. Neway Valve suzhou is currently generating about 0.13 per unit of volatility. If you would invest  2,286  in Neway Valve suzhou on December 24, 2024 and sell it today you would earn a total of  421.00  from holding Neway Valve suzhou or generate 18.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dongfeng Automobile Co  vs.  Neway Valve suzhou

Dongfeng Automobile

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dongfeng Automobile Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dongfeng Automobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Neway Valve suzhou

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neway Valve suzhou are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Neway Valve sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dongfeng Automobile and Neway Valve

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

The idea behind Dongfeng Automobile Co and Neway Valve suzhou 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.